Home Daily Commentaries USD/CAD rises as Loonie fails to capitalize on strong GDP and oil data

USD/CAD rises as Loonie fails to capitalize on strong GDP and oil data

Daily Currency Update

The USD/CAD pair moved on an upward trajectory to trade near 1.345. The improved West Texas Intermediate (WTI) oil price, at $76.40 a barrel, failed to provide the CAD with any significant support. The stronger-than-expected Canadian Gross Domestic Product (GDP) data could provide support to deter the Bank of Canada (BoC) from reducing rates in the February meeting. Canada's GDP rose to a growth rate of 0.2% monthly in December. Markets anticipated a growth of 0.1% against the flat 0.0% in November. Furthermore, the S&P Global Manufacturing Purchasing Manager’s Index (PMI) for January is set to be released today.

Key Movers

The USD fell back to trade nearly flat ahead of this morning’s market open. The greenback initially rose higher on the back of the first-rate decision of the year from the Federal Reserve which held rates at 5.5%. Commentary from Fed chairman Jerome Powell pushed back against a March rate cut as well. The Jobless Claims report fell in line with the Job Cuts data as both headed higher. Initial Jobless Claims were seen rising from 215,000 to 224,000 as Continuing Jobless Claims headed from 1.828 million to 1.898 million. The CME Group’s FedWatch Tool looked forward to the March 20th Fed meeting. Expectations for a hold in rates were at 64.5%, while 35.5% called for a rate cut. The benchmark 10-year US Treasury Note traded substantially lower to 3.94%, the lowest level for this week.

The euro continued to fluctuate against the USD, trading slightly above 1.08. US data showed that weekly Initial Jobless Claims rose more than expected, limiting the USD's gains, and allowing the pair to hold its ground.

The GBP/USD pair erased a portion of its daily losses and stabilized above 1.265. The Bank of England (BoE) maintained the policy rate at 5.25% as expected, but Governor Andrew Bailey refrained from giving fresh clues on the timing of the policy pivot.

The Australian dollar rebounded versus the USD toward the 0.66 level. The AUD found support from China's fiscal boost and an upbeat Manufacturing Purchasing Manager’s Index (PMI) report, despite dismal Australian housing data.

Expected Ranges

  • EUR/CAD: 1.4506 - 1.4564 ▲
  • GBP/CAD: 1.6986 - 1.7053 ▲
  • AUD/CAD: 0.8762 - 0.8856 ▲
  • USD/CAD: 1.3361 - 1.3461 ▲