Canadian dollar rebounds from nine-day low
Monday 27 March, 2023
Daily Currency UpdateThe Canadian dollar continued its rebound from the nine-day low reached last Friday. As concerns about the global banking sector dissipated, the CAD strengthened against its U.S. counterpart. After a short intraday consolidation earlier in the day, the USD/CAD pair is falling below 1.3700.
Oil prices rose slightly to start the week as traders anticipate that an increase in demand from China and lower production levels by Russia will lead to a shortage of supply. Steps were taken to contain a potential banking crisis after a halt in oil exports from Iraqi Kurdistan through Turkey, which could have hit demand for oil. US crude oil prices rose 1.8% to trade over 70.53 a barrel.
Key MoversThe dollar began the week steady with no clear direction against its major rivals, the dollar index (DXY) is trading around the 103.09 mark. Global banking stocks have been hit hard this month following the abrupt failure of two U.S. lenders and the bailout of Credit Suisse.
On Monday, the Federal Deposit Insurance Corporation announced that First Citizens BancShares Inc would acquire all of Silicon Valley Bank's deposits and loans. The chance of any further new negative news from the U.S. or European financial sector has led to traders being more cautious.
As expected last week, the Federal Reserve increased interest rates by 25 basis points. With the recent issues afflicting the banking sector, the Fed has adopted a cautious stance. Fed chair, Jerome Powell, has stated that the door remains open to the possibility of future rate hikes.
The euro rose modestly against the dollar to trade above 1.0772. European Union money supply growth for February fell short of projections, with the increase in business and personal loans both slower than in January. Data from Germany revealed an improvement in the business climate as the German Information and Forschung (Ifo) business climate index came in at 93.3 this month, up from the previous month's 91.1. This positive news is lending support to the EUR/USD pair and helps the Euro remain resilient against the dollar.
On Monday an improvement in mood toward risk pushed the GBP/USD pair up as the pound trades over 1.22500. Bank of England governor, Andrew Bailey, is scheduled to speak today and with the lack of any high-impact data releases, investors will be paying close attention to his speech.
- EUR/CAD: 1.4763 - 1.4806 ▼
- GBP/CAD: 1.6787 - 1.6834 ▲
- AUD/CAD: 0.9098 - 0.9143 ▼
- USD/CAD: 1.369 - 1.374 ▼