Daily Currency Update

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Hitting the high note

CAD - Canadian Dollar

The Canadian dollar climbed toward its highest levels since the COVID-19 lockdowns, hitting 1.323 in early morning trading.

Since hitting 1.456 on March 16, the USD/CAD pair has dropped nearly 9%. Today’s gains could be attributed to the demand for oil. In London, a barrel traded for $45 and the US announced a decrease in its stockpiles.

However, the Canadian dollar and other commodity currencies benefit from easier government monetary policy. As more money floods markets, there is a greater appetite for risk. Currency markets remain tied to risk and fiscal spending at present.

Key Movers

The Great British pound edged lower, dipping below 1.30. Fear of second wave of infections derailed the recovery, dampened demand and prompted a shift away from near five-month highs. Despite registering its largest monthly rally in more than 10 years, there are headwinds ahead for the GBP. Brexit negotiations remain at loggerheads as the December deadline looms larger, while the threat of COVID-19 is far from over. It is unlikely the economy will be operating at 100% until well into 2021. We expect resistance on moves approaching 1.33/1.35 with US weakness the key to any sustained upturn.

The Australian dollar edged higher through trade on Tuesday, pushing back through 0.7150 in what was an otherwise lackluster day across both currency and equity markets was. Having crept upward throughout the domestic session following a stronger than anticipated trade surplus and a relatively rosy RBA outlook. The Reserve bank offered few surprises, maintaining its current interest rate setting and only marginally adjusting bond purchases, while re-iterating their view, the economy was performing better than initially expected. While they did point to a sharp decline in GDP through 2020 the promise of a quick recovery through 2021 helped underpin the AUD. The extended and tightened lockdown in Victoria does however pose a significant threat to future growth prospect as the impact to key business across the local economy worsens. Some estimates suggest north of 100,000 business will not survive the new round of lockdown with a rush on insolvencies after job keeper and fiscal support measures ease.

Expected Ranges

USD/CAD: 1.323 - 1.336 ▲

GBP/CAD: 1.735 - 1.746 ▲

EUR/CAD: 1.569 - 1.576 ▼

CAD/AUD: 1.042 - 1.049 ▲