Daily Currency Update

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Canadian dollar keeps up momentum

CAD - Canadian Dollar

The Canadian dollar briefly lost momentum yesterday and then in overnight trading the Loonie regained its footing, pushing USDCAD back down toward 1.26.

USDCAD benefited Canadian buyers for the eighth day in a row, moving further south. The strength of the Canadian dollar has been bolstered by weak US labor issues.

The US labor market continued to be the topic de jour in policy circles. Yesterday, Federal Reserve Chairman Jerome Powell said that the US was still very far from a strong labor market and estimated the unemployment rate close to 20%. Today, the number of new unemployment claims increased from last week and was higher than expected.

Key Movers

Over in Europe there was a lack of data to drive markets. German leaders decided to extend the country’s lockdown to March 7. German chancellor Angela Merkel and the country’s 16 governors decided Wednesday to largely extend the country’s lockdown amid concerns that new virus variants could reverse a decline in new confirmed cases.

The Great British pound outperformed its peers on early Wednesday trading, extending beyond 1.3850 and marking fresh two-year highs at 1.3865. However, a dip in financial markets in the north American sessions blunted the British pound's advance against the euro. The UK currency nevertheless remains well supported against nearly all its peers in the short-term and retains its position as 2021's top performing G10 currency.

The Australian dollar drifted between well-defined ranges through trade on Wednesday, bouncing between 0.7720 and 0.7755. Moves within currency markets were largely muted as a lack of headline data points and limited news flows offered little to shift current market biases. US inflation data edged lower, down 0.2% in January, easing concerns inflation will gather pace as the economic recovery builds. While the softer than anticipated figures forced bond yields lower, the impact on the USD was largely muted, providing little scope for the AUD to extend beyond resistance at 0.7740/50. Having edged toward the lower end of recent ranges on open the AUD currently buys 0.7720 US cents.

Expected Ranges

EUR/CAD: 1.537 - 1.540 ▲

GBP/CAD: 1.751 - 1.758 ▲

AUD/CAD: 0.980 - 0.984 ▼

USD/CAD: 1.266 - 1.271 ▲