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Oil demand lifts Canadian dollar

CAD - Canadian Dollar

The Canadian dollar reached a seven-day high against the US dollar this morning after WTI crude surpassed $42 per barrel. USD/CAD reached 1.323 this morning.

Just as we’ve seen throughout the COVID-19 pandemic, the Canadian dollar has fluctuated with the equity markets. Its been no different. Equity markets were driven higher by the demand for crude, and a modest increase in the US Consumer Price Index.

Key Movers

The euro slipped back below 1.1750, drifting off intraday highs at 1.18 amid a broader USD uptick. The single currency enjoyed early momentum following a ZEW survey of economic sentiment showed a significant improvement in German optimism. With Europe’s engine room gaining in confidence there is hope the EU will enjoy a swift recovery as we move through the latter half of 2020 and into 2021, ensuring the euro remains well bid through the medium term.

The Great British pound retraced early gains and again failed to hold onto an extension beyond 1.31 as a US dollar uptick and dour labor market report dampened demand for the resurgent pound. Data showed job losses reached their highest level in more than 10 years throughout the second quarter, a stark reminder just how much damage was done in the early days of the pandemic.

The Australian dollar opens lower this morning having drifted off intraday highs at 0.7190 overnight amid heightened concerns US lawmakers will not be able to reach an agreement on COVID-19 relief measures while tensions with China remain frosty. The risk of protracted negotiations is significant as it delays critical unemployment benefits and income support measures currently propping up consumption. A long-term freeze on support will essentially bring consumption to grinding halt. The uncertainty meant demand for risk has soured Tuesday forcing the AUD back below 0.7150 to intraday lows at 0.7135.

Expected Ranges

EUR/CAD: 1.560 - 1.565 ▼

GBP/CAD: 1.726 - 1.739 ▲

AUD/CAD: 0.947 - 0.951 ▲

USD/CAD: 1.323 - 1.334 ▲