Daily Currency Update

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Cold weather? That’s not a Canadian oil problem

CAD - Canadian Dollar

Demand for the Canadian dollar retreated this morning after the USDCAD fell below 1.27 overnight to 1.267. With US oil refineries in the Texas hampered by the unusually cold weather, Canadian petrol should have taken up the slack. And with oil prices are near one-year highs, we’ve seen the CAD gain some ground against the euro and Great British pound. However, equity markets continued to play a role in the value of CAD. A more bullish market drove equities higher earlier in the week. But this morning, we’ve seen a sell off in markets, which has increased demand for the US dollar.

Key Movers

The worst performing currency yesterday was the euro. Even though we saw improved numbers from the ZEW survey, there is concern ahead of tomorrow’s PMI reports. A lot of the major economies in the Eurozone are currently in full national lockdown, including Germany. Which is expected to remain in lockdown until March 7. The rate at which the Eurozone is vaccinating is also weighing heavily on the single currency.

The pound traded lower yesterday due to mild improvements in inflation and renewed talks on negative interest rates. The Consumer Price Index fell to -0.2% for January achieving a rate of 0.7%, a far cry from the 2% target set by the Bank of England. Which is why negative interest rates are still being spoken about. Bank of England Deputy Governor Ramsden did comment that quantitative easing or bond buying is their favored route.

The Australian dollar drifted lower through trade on Wednesday, depressed by weakness across equities and a slew of stronger than anticipated US macroeconomic data sets. Having given up 0.78 US cents, the AUD remained largely range bound through the domestic session bouncing between 0.7740 and 0.7770 before marking fresh daily and weekly lows at 0.7725 following a massive upward surprise in US retail sales. Having disappointed in December, US consumers turned out in January, marking a 5.1% uptick in spending; well above the 1% anticipated.

Expected Ranges

EUR/CAD: 1.528 - 1.536 ▼

GBP/CAD: 1.758 - 1.774 ▲

AUD/CAD: 0.983 - 0.987 ▲

USD/CAD: 1.267 - 1.272 ▲