Daily Currency Update

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No surprise: GDP numbers down in latest release

CAD - Canadian Dollar

Canada’s real GDP dropped 11.6% in April, following a 7.6% decline in March. The two-month decline is due to the unprecedented economic situation brought on by the COVID-19 pandemic. The USD/CAD pair dropped on the news to 1.359.

According to StatsCan, preliminary information indicates an approximate 3.0% increase in real GDP for May. Output across several industrial sectors—including manufacturing, retail and wholesale as well as the public sector (health, education and public administration)—increased in May, as activities gradually resumed in phases depending on the type of activity and the geographic area. Owing to its preliminary nature, this estimate will be revised on July 31 with the release of the official monthly GDP for May reference month.

While there is still an overwhelming sense a global v-shaped recovery is possible, the recent resurgence in COVID-19 infections rates serves as a reminder that the promise of full-scale economic re-opening may still be some time off, forcing investors to check the recent risk on run.

Key Movers

Haven currencies were the days big losers as the JPY and CHF both retreated amid an equity led risk on move. While price action across currency markets was largely muted throughout trade on Monday the rebound in the S&P 500 did prompt a small risk on correction forcing the Yen and Franc near half a percent lower as the promise of sustained Federal Reserve support continues to prop up equity markets.

The Great British pound fell through trade on Monday as concerns regarding Brexit and Britain’s ability to fund planned fiscal infrastructure programs forced the below 1.23 to intraday lows at 1.2252.

Attentions today remain squarely affixed to the evolving fight against COVID-19 as risk continues to drive direction and underlying fundamentals are largely ignored.

Expected Ranges

USD/CAD: 1.36 - 1.369 ▲

GBP/AUD: 1.677 - 1.685 ▼

EUR/CAD: 1.529 - 1.538 ▲