Daily Currency Update

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Euro slide benefits Canadians

CAD - Canadian Dollar

It took fewer Canadian dollar to purchase goods from Europe last month. Demand for CAD outpaced the euro during January, pushing EURCAD from a high of 1.581 to a low of 1.53. Now, as Canadians begin to manufacture their own COVID-19 vaccine, Europeans have struggled to secure enough doses. And over the last week, EURCAD continued in Canadians' favor.

This morning, the US ADP Non-Farm Employment figures crushed expectations, a good sign for USD. The early look of employment growth revealed a 174,000 job increase in January. USDCAD stayed below 1.28 on the news.

Key Movers

The pound continues to be buoyed by the pace of the UK's Covid-19 vaccine rollout as well as encouraging news about the infection rate continuing to drop. The latest figures released yesterday showed new positive cases had fallen to 16,840 its lowest daily total since December and well below the peak we saw in early January when over 60k were shown to have tested positive in a single day. The main area of focus for pound crosses is GBPEUR with sterling making several plays to break above 1.1363 (which represents 0.88 for EUR/GBP) with strong resistance being shown at this key level.

The Australian dollar tested fresh year to date lows overnight, drifting below 0.76 US cents, moving against broader market sentiment following dovish commentary from the RBA. Having touched intraday highs at 0.7660 in the lead up to the RBA policy announcement the AUD fell steadily through the afternoon, extending losses into offshore trade marking new lows at 0.7566. Policymakers surprised markets choosing to extend its QE program and raise the bar for any future interest rate adjustment. While the RBA did upgrade its economic outlook, it suggested a return to labor markets conditions that would support a rate hike were unlikely to be met until 2024. Such a pessimistic and long-dated forecast suggests record low interest rates will remain unchanged for much longer than first anticipated.

Expected Ranges

EUR/CAD: 1.536 - 1.540 ▲

GBP/CAD: 1.743 - 1.749 ▼

AUD/CAD: 0.971 - 0.975 ▼

USD/CAD: 1.276 - 1.282 ▲