Daily Currency Update

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New year, new start for Loonie

CAD - Canadian Dollar

The Canadian dollar continued to benefit from a weakening US dollar and a new trade deal between the European Union and the United Kingdom.\

With the United States economy expected to falter in its recovery, COVID-19 still running rampant, political risks expected to rise and the Federal Reserve printing money, the US dollar finds itself under continued, sustained downward pressure. USDCAD, which jumped up to 1.29 in late December, returned to 1.27 with the new year.

The new trade deal signed by the UK and EU weakened the EUR against CAD. After reaching 1.576 on the night of the agreement, EURCAD traded at 1.564 at the time of writing.

Key Movers

The recently agreed UK/EU trade deal means that the biggest risk factors and uncertainties are finally in the rear-view mirror and the pound is certainly taking advantage of this. Despite slipping oddly when the deal was struck on Christmas Eve, GBPUSD now finds itself at the rather giddy heights of 1.36. GBPEUR is also surging but its gains are slightly more modest and will remain to be so given the superb strength of the euro now (EURUSD 1.22).

The Australian dollar ended 2020 breaking through yet another yearly high, peaking at 0.7741 before taking its foot off the gas for New Year’s Eve celebration. The Aussie opened 2021 slightly softer at 0.7709, but still amongst the top performers in 2020 after posting gains for seven consecutive weeks. It reached levels not seen since April 2018. With little on the economic calendar to drive momentum, the Aussie continued to trade primarily on the rapidly weakening USD, positive risk sentiment and COVID headlines. Moving into 2021, AUD is expected to continue the current trend with little on the economic calendar to digest to start the new year.

Expected Ranges

EUR/CAD: 1.542 - 1.581 ▲

GBP/CAD: 1.726 - 1.741 ▼

AUD/CAD: 0.977 - 0.981 ▲

USD/CAD: 1.266 - 1.275 ▲