Daily Currency Update

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Strong commodity markets push Canadian dollar higher

CAD - Canadian Dollar

The Canadian dollar continued to strengthen, pushed largely by higher commodity prices and supported by a more hawkish tone by the Bank of Canada last week.

Governor Tiff Macklem indicated that interest rates would rise as early as the second half of 2022, making the Bank of Canada the first of the G10 central banks to raise interest rates post-Covid. Macklem is set to testify before the House of Commons Standing Committee on Finance today. He is expected to keep comments in line with last week’s monetary policy report statement.

Oil prices also climbed slightly higher after an OPEC committee raised its expectations for demand in 2021. But the committee warned the deadly second wave of Covid-19 hitting India, Brazil and Japan could derail oil demand forecasts.

Key Movers

The euro reached its highest level in two months yesterday climbing to 1.2116. Renewed optimism in Europe’s vaccine program and signs of easing Covid-19 infections in the region helped fuel demand for the single currency.

The pound struggled again to extend beyond 1.40 yet it remains well supported above 1.37. Attention turns toward next week’s Bank of England policy meeting and rate statement.

The US dollar is edging slightly higher against its major counterparts ahead of today’s Federal Reserve meeting. The two-day Federal Reserve’s Open Market Committee (FOMC) meeting that begins today and ends Wednesday afternoon.

Expected Ranges

EUR/CAD: 1.496 - 1.500 ▼

GBP/CAD: 1.720 - 1.727 ▲

AUD/CAD: 0.963 - 0.968 ▼

USD/CAD: 1.238 - 1.241 ▲