Daily Currency Update

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Canadian dollar edges lower

CAD - Canadian Dollar

The Canadian dollar edged lower against its broadly weaker US counterpart today. CAD, mostly seen as a commodity currency, failed to extend higher even as oil prices climbed more than 6% since last week. USDCAD was up 0.38% to 1.2107 at the time of writing.

The Bank of Canada’s hawkish tone and higher commodity prices globally have bolstered demand for the Canadian dollar in the last two months. Last week, it touched its highest level since May 2015.

No domestic economic data is due for the rest of the week, but Bank of Canada Deputy Governor Timothy Lane is set to speak on a virtual panel on the future of digital currencies in Canada today. He’s expected to maintain the central bank’s stance on inflation and interest rates.

Key Movers

EURUSD was down slightly 0.2% to 1.2221, but still close to its highest since January. Yesterday, the European Central Bank (ECB) Governing Council member François Villeroy said that the ECB would be happy to let inflation run above the 2% mark for some time. The comments didn’t have any significant impact on the euro, however these comments give us a good understanding of the ECB’s stance on inflation.

GBPUSD dipped back to the 1.41 handle yesterday and was down 0.8% this morning, trading at 1.413. Dominic Cummings, UK Prime Minister Boris Johnson’s former top advisor, is set to give evidence on the UK government’s handling of the COVID-19 crisis to a committee of members of Parliament. If there is heavy criticism of how things were dealt with, we could see a selloff in sterling.

The Reserve Bank of New Zealand kept current rates unchanged but surprised the markets when the central bank hinted at a possible rate hike as early as September 2022. The New Zealand dollar climbed to a three-month high on the news.

The US dollar was steady near five-month lows ahead of tomorrow’s quarterly GDP numbers. The US Dollar Index was trading at 89.89 at the time of writing.

Expected Ranges

EUR/CAD: 1.474 - 1.481 ▲

GBP/CAD: 1.703 - 1.713 ▲

AUD/CAD: 0.933 - 0.940 ▲

USD/CAD: 1.204 - 1.211 ▲