Daily Currency Update

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Upbeat GDP and oil prices keep CAD afloat

CAD - Canadian Dollar

The Canadian dollar continued to rally against the US dollar as oil prices steady at a two-year high. USDCAD hit a fresh six-year low overnight at 1.2007, before climbing back up to 1.2066 at the time of writing. The Canadian dollar is on track for a fourth straight monthly gain.

The Organization of the Petroleum Exporting Countries and their allies kept their current plan to gradually increase oil production to July in place.

Statistics Canada reported that the economy’s GDP grew 1.4% in the first quarter. Data also showed Canada posted a current account surplus for the first time since 2008. A monthly jobs report is due on Friday, which could offer investors clues on the Bank of Canada’s outlook.

Key Movers

Inflation in the eurozone rose sharply last month to 2%, which is just above the European Central Bank’s target. Despite the recent worry around inflation, the ECB have stated that they will not overreact and that it is not the right time for a rate change. This will continue to weigh on the euro. EURUSD was down slightly 0.13% at 1.2197 at the time of writing.

The pound moved lower against the dollar, steadying at the $1.41 range after briefly touching a three-year high on Tuesday. GBPUSD was trading at 1.4159 at the time of writing. GBPUSD increased by 2.65% in May and 0.3% in April, however, has been very range bound over the past two weeks. Analysts are predicting a sharp spike in COVID-19 variant cases over the coming days after a bank holiday where so many travelled. If the UK lockdown does end on June 21st, expect a rally in GBP-based currency pairs.

An uptick in US manufacturing activity in May helped the US dollar edge above five-month lows. The US Dollar Index was up 0.26% this morning, trading at 90.07 at the time of writing. Investors are currently fixated on Friday, as US Federal Reserve Chair Powell is expected to speak and the May employment figures are released.

Expected Ranges

EUR/CAD: 1.470 - 1.475 ▼

GBP/CAD: 1.702 - 1.709 ▲

AUD/CAD: 0.931 - 0.936 ▼

USD/CAD: 1.201 - 1.209 ▼