Daily Currency Update

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Demand favors Canadian dollar

CAD - Canadian Dollar

Weakening demand for the US dollar has pushed USDCAD to its lowest level since May 2018. At the time of writing, USDCAD fell through 1.30 and traded at 1.297.

While demand has favored CAD over the USD, demand for CAD has been suppressed against other currencies. Mainly due to the fact that oil dropped near $45 a barrel as OPEC+ plans to postpone its production hike.

Markets have left the USD because of greater confidence elsewhere. The Dow Jones Industrial Average has stayed above 30,000 and traders have been willing to invest in other economies. Therefore, demand for USD has been down.

Key Movers

European Commission Chief Ursula von der Leyen said on Wednesday that "genuine progress" had been achieved but on Friday UK Secretary of State Dominic Raab stated that important differences were keeping the two sides from a deal. The two sides have until December 11 and the EU council meeting of 2020. Otherwise they will either need to extend the deadline or fall into a no deal.

Looking ahead to this week, the outcome of face-to-face Brexit talks between the UK and European Chief negotiators, David Frost and Michel Barnier respectively, will be closely watched. On the data front the main news comes in the form of EU Consumer Price Index (CPI) and retail sales on Tuesday and Thursday, plus November’s US Non-Farm payrolls on Friday.

The risk-on mood saw the USD fall across the board, allowing the AUD to benefit however with the NZD also rising strongly, the AUDNZD cross only rose 20 points from 1.0500 to 1.0520. Looking to the day ahead, in Australia they release company profits data for Q3 and the Melbourne Institute’s inflation gauge. Some analysts are forecasting a 6% rise in Q3 company profits after we saw a 15% surge in Q2, largely resultant of the unprecedented fiscal support measures. Across the pond we will have ANZ business confidence numbers before the increasingly important Chinese manufacturing PMI data is released. We expect the Chinese PMI data to set the tone for the Australian Dollar for the week ahead. A strong release or a continued rise in risk sentiment, could see the domestic unit test 0.7415 against the greenback.

Expected Ranges

EUR/CAD: 1.550 - 1.555 ▲

GBP/CAD: 1.726 - 1.734 ▼

AUD/CAD: 0.953 - 0.961 ▲

USD/CAD: 1.293 - 1.300 ▲