Daily Currency Update

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Loonie Under Pressure as Equities and Oil Prices Fall

CAD - Canadian Dollar

The Canadian dollar has traded in a 70 basis point range overnight against its U.S. dollar counterpart. Adding to the currency pair's volatility was the market's reaction to the Federal Reserves' stance on keeping interest rates in the U.S. at 0.00-0.25% out to 2023. Chairman Jerome Powell commented that " more fiscal support is likely needed," and that the Fed cannot act alone. He continued that Congress will need to work quickly on another Covid19 relief package to keep stimulus measures well intact.
Equity markets sold off in overnight trading, and US stock markets are all pointing to negative opens this morning. Couple the demand for oil falling around the world due to Covid19 economic slowdowns and closures. The IEA and OPEC both trimmed their 2020 outlook for the crude oil market, and large oil producers have signaled that demand might have peaked in 2019. This has put pressure on oil, and we see a price slip below 40 dollars a barrel on WTI today. With equity markets and oil prices pointing and in negative territory, the Canadian dollar falls on the back of U.S. dollar demand for U.S. treasuries' safety, the markets risk-off instruments of choice.
The USDCAD pair sees support at the 20 day moving average of 1.3142 and resistance at the 50 day moving average of 1.3282

Key Movers

The major event from yesterday was the U.S. Federal Open Market Committee (FOMC) meeting, which failed to surprise markets as the current policy stance was retained. The committee insisted rates will be kept at the current level few at least the next few years and reiterated it would aim for an inflation rate above 2% for some time.
The USD index was mostly unchanged, rising only 0.2% however, the EUR underperformed. EUR/USD fell from 1.8880 to 1.1788 during trade as ECB officials expressed concerns that the recent EUR strength was having a dampening effect on inflation. USD/JPY also fell below 1.05 to touch a six week low of 104.81.

Expected Ranges

USD/CAD: 1.3180 - 1.3247 ▲

EUR/CAD: 1.5534 - 1.5611 ▲

GBP/CAD: 1.6978 - 1.7153 ▼

AUD/CAD: 0.9598 - 0.9652 ▲

NZD/CAD: 0.8840 - 0.8891 ▲

EUR/USD: 1.1737 - 1.1812 ▼