Daily Currency Update

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The Loonie has kept its gains for now after the Bank of Canada announced no changes to rates.

CAD - Canadian Dollar

The Loonie has kept its gains versus the U.S. dollar after the BoC kept its rate at 0.25 percent. Earlier today, the BoC also announced its plans to slow the frequency of extended term repo and bankers’ acceptance purchase programs. The BoC said, “...it recognizes the importance of maintaining these facilities as backstops given ongoing uncertainty, and as such is committed to continuing them at this frequency until the end of October 2020.” The BoC said that market conditions have improved, and the economy appears to be avoiding worst-case scenarios. However, the BoC’s expectation of a “protracted and uneven” recovery and “heavily clouded” outlook means asset purchases, market support, and cooperation with fiscal authorities will continue well into 2021, at a minimum. From an economic standpoint, the BoC statement projects a 10-20 percent drop in the economy for the second quarter. Some key technical levels in the USD/CAD pair are 1.3855, 1.3733, and 1.3609 as resistance levels and 1.3481, 1.3462, and 1.3439 as support levels.

Key Movers

Surveys show economic improvement in May in China and Europe. Economic data from the developed world still looks grim, but hopes that the global economy has bottomed is pushing risky currencies higher. European purchasing manager indices released earlier confirmed a bounce from April’s lows and China’s Caixin services PMI signaled growth.

Australia’s economy confirmed it had fallen into recession for the first time in 30 years with a second straight contraction in the first quarter.

The Greenback seems to be capitulating after many days of weakness. It seems to be within attractive levels as we await the ECB announcement tomorrow.

The US dollar dollar falls versus all G10 currencies, except versus the Japanese Yen. The US dollar index has fallen 0.42 percent, and the Euro has increased 0.61 percent versus the US dollar in a move that seems to be more of a capitulation and shows oversold levels for the US dollar in the short-term.

Crude oil hit its highest price in three months as speculation strengthened that OPEC and other major exporters will extend their current deal on output cuts for another three months. However, the rally stopped this morning and crude oil is trading flat as there was doubt at the OPEC about cheating by some nations on their output cuts deal.

Expected Ranges

USD/CAD: 1.3464 - 1.3600 ▲

EUR/CAD: 1.5055 - 1.5181 ▼

GBP/CAD: 1.6845 - 1.7096 ▼

AUD/CAD: 0.9282 - 0.9370 ▼

NZD/CAD: 0.8642 - 0.8691 ▼