Home Daily Commentaries CAD steady ahead of Fed announcement

CAD steady ahead of Fed announcement

Daily Currency Update

CAD - Canadian DollarThe Canadian dollar was little changed against the US dollar this morning after data showed consumer prices rising at the fastest pace in a decade. CAD fell near a seven-week low against its US counterpart yesterday despite an uptick in oil prices. USDCAD was up 0.01% to 1.2182 at the time of writing.Canada’s annual inflation rate climbed to 3.6% in May, up from 3.4% in April according to Statistics Canada. This was above analyst expectations and the highest number since May 2011. With US and UK inflation also on the rise, investors are looking to the US Federal Reserve policy announcement later today for signs of a response.

Key Movers

The pound held its ground well overnight despite pressure from the US dollar. After Monday's announcement that the June 21st easing of all lockdown measures will be postponed by four weeks, the pound could have weakened. Instead it remained buoyant, especially after the release of stronger than expected inflation data. GBPUSD climbed 0.20% to 1.4109 at the time of writing. UK CPI year-on-year posted a higher than expected reading of 2.1% versus expectations of 1.8%. This suggests that inflation in the UK is on the rise, and the Bank of England could have the same dilemma as the US Federal Reserve. The US central bank is facing some pressure to ease its bond-buying and increase interest rates faster than expected due to rising prices.The Australian dollar slipped below 0.77 US cents yesterday, hampered by an increased demand for haven assets and a downturn in key commodity prices. Markets largely ignored the Reserve Bank of Australia’s June meeting minutes. Instead, the AUD came under pressure as copper prices fell 4% on reports that China will release some of its stockpile in a bid to control commodity prices. Copper prices have fallen 11% since the mid-May high and while still historically elevated may struggle to hold onto current levels through the weeks ahead. AUDUSD was up 0.21% this morning, trading at 0.7704 at the time of writing. The US dollar was steady as investors awaited the end of the Federal Reserve’s monetary policy meeting. The US Dollar Index was up 0.04% at 90.58 at the time of writing. The central bank is due to release a statement at 2 p.m. eastern and Federal Reserve Chairman Jerome Powell is expected to hold a news conference 30 minutes later. Investors will be looking for any comments around inflation.

Expected Ranges

  • EUR/CAD: 1.4757 - 1.4791 ▲
  • GBP/CAD: 1.713 - 1.7206 ▲
  • AUD/CAD: 0.9355 - 0.9393 ▲
  • USD/CAD: 1.2172 - 1.22 ▲