Daily Currency Update

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USDCAD nears 1.27

CAD - Canadian Dollar

Demand for the Canadian dollar surged through trade on Thursday, building on the weeks earlier gains to break resistance and tease 1.27. USDCAD fell steadily throughout the day as rising commodity prices, led by oil and iron ore, fueled CAD demand.

Despite the Q4 retracement, expectations vaccines will facilitate a swift return to normal activity helped drive oil prices higher, while iron ore broke through $150 USD a ton. Further support for CAD came on the back of an uptick in US jobless claims and optimism surrounding US Fiscal Stimulus negotiations.

Key Movers

The European Central Bank increased the overall size of its Pandemic Emergency Purchase Program by 500 billion euros to 1.85 trillion euros, in line with market expectations. The program was extended 9 months to March 2022, which eases the financial burden on corporates. The ECB will monitor the euro over the next few months to combat stagnant inflation.

The pound saw much of its recent gains eroded on Thursday as Brexit turned sour. Prime Minister Boris Johnson and European Commission President Ursula Von Der Leyen walked away from their meeting without any substantial progress. Johnson warned that there is a high chance of a no deal Brexit and to prepare for the worst. This has knocked the confidence in the pound, causing GBPUSD to drop from highs of 1.3540 last week, to just above 1.32 handle now. Johnson has said he would like a concrete plan in place by Sunday, which will outline the future of talks and options going forward. The pound has also felt the force of COVID. With cases once again on the rise, it is likely the Government will force certain areas into ‘Tier 3’ at the next review on Wednesday, including London. This obviously affects trade and business confidence, in turn, knocking the pound.

The Australian dollar surged through 0.75 US cents through trade on Thursday, building on the weeks earlier gains to break resistance and mark fresh highs at 0.7540. AUD climbed steadily throughout the day as rising commodity prices, led by oil and iron ore, fueled demand. Despite the Q4 retracement, expectations vaccines will facilitate a swift return to normal activity helped drive oil prices higher, while iron ore broke through $150 USD a ton. Further support came on the back of an uptick in US jobless claims and optimism surrounding US Fiscal Stimulus negotiations, while markets continued to ignore increasing AU-China diplomatic tensions. With reports cotton and wheat have been marked for increasing import tariffs, it appears hostilities are unlikely to improve in the near term, perhaps weighing on medium and longer-term upside trends.

Expected Ranges

EUR/CAD: 1.541 - 1.549 ▼

GBP/CAD: 1.678 - 1.696 ▲

AUD/CAD: 0.956 - 0.963 ▼

USD/CAD: 1.272 - 1.278 ▲