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Canadian continues downturn ahead of Bank of Canada announcement

Wednesday 7 December, 2022

Daily Currency Update

The Canadian dollar continues to underperform the American dollar ahead of today’s intertest rate announcement from the Bank of Canada (BoC).  The release at 10 AM Est could create volatility for the CAD as it has the potential to take it either way.  The impact will be determined by the size of the hike with some analysts calling for 25-point hike, while others are calling for a more hawkish 50 points.  Also damaging the Canadian dollar in early sessions is the act that West Texas Oil (WTI) is trading down to $74 barrel from last week’s high or $82.

Key Movers

After the release of better than expected trade numbers yesterday, markets tuned into comments from Goldman’s David Solomon and JP Morgan’s Jamie Dimon, both of whom warned of a recession in 2023.  Oil continues to fall, now under $75 a barrel along with stocks, helping the USD gain heading towards the end of the year. Bad news continued in the housing sector with the early morning release today of US mortgage applications which fell off by close to 2% from the previous print. Trading in Asian Pacific was softer overnight despite China indicating that they will take further steps to move away from COVID-19 restrictions.  The AUD was also down in overnight markets as Australian GDP misses’ expectations, coming in at 0.6%, down from the 0.9% mark we saw in November. The lone currency to make gains in overnight sessions was the euro, reversing losses we had seen over the last 2 days.  The euro saw a bump after Eurozone GDP releases showed 0.3% growth Quarter over Quarter and an annualized number of 2.3%, both of which beat the consensus expectations.

Expected Ranges

  • EUR/CAD: 1.4281 - 1.4398 ▲
  • GBP/CAD: 1.6543 - 1.6661 ▲
  • AUD/CAD: 0.9127 - 0.9179 ▲
  • USD/CAD: 1.3613 - 1.3698 ▲