Daily Currency Update

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Loonie rebounds on traders' risk appetite

CAD - Canadian Dollar

The Canadian dollar bounced back after traders initially sold off commodity currencies on the news that the US surpassed 2 million cases of the disease caused by COVID-19.

With new hot spots appearing across the US, there is a sense that Canada’s largest trading partner will be embroiled in a battle against COVID-19 well into 2020 and most likely 2021 as appetite for social distancing and economic lockdown restrictions falter.

Safe haven currencies led majors higher through trade on Thursday with the CHF, JPY and USD all benefiting from the shift in risk sentiment. Having lost nearly 5% through the last month, the US dollar index jumped sharply, gaining 1% on the day as the AUD, NZD and CAD led commodity currencies lower while the Euro and GBP both suffered modest corrections.

That’s changed in early trading today as both currency and equity markets have recouped some of yesterday’s losses.

Key Movers

The AUD was the worst performer on the day falling 2% and slipping below 0.6850. Sterling fell 1% as reports it will engage in intensified free trade discussions with the EU, reminded investors Brexit still looms larger and the likelihood of a hard break increase as we move closer to the official divorce date.

The question now is, was this merely a short-term correction following the upturn of the last fortnight or the beginnings of a broader shift in risk sentiment.

Attentions today remain squarely affixed to the risk narrative.

Expected Ranges

USD/CAD: 1.352 - 1.359 ▲

EUR/CAD: 1.529 - 1.544 ▲

GBP/CAD: 1.709 - 1.717 ▲