Daily Currency Update

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The Loonie trades slightly higher following bets that the Fed might cut rates at least once this year.

CAD - Canadian Dollar

Without economic data being released in Canada today, all the eyes are focused on Fed Chairman Jerome Powell and his congressional testimony. The expectations are that he will provide a positive economic update. This is the first of his twice a year updates to congress. in times of coronavirus in China.

The USD/CAD pair is trading at 1.3305, representing a fall of 0.1 percent (stronger Loonie); however, it stopped appreciating when Canadian Finance Minister Bill Morneau warned that the spread of the coronavirus is likely to have a “real” impact on Canada’s economy. Meanwhile, regarding crude oil, Russia is taking its time to study the OPEC technical committee’s new output-cuts proposal. Still, it is keeping the group in limbo as Loonie traders are awaiting a definitive response to the coronavirus outbreak.

Key Movers

In the U.K., there was a mixed bag of data keeping the chances of a Bank of England rate cut this year intact. GDP and manufacturing numbers were released; the positive surprise was the GDP numbers (YoY) which came in at 1.1 percent when the forecast was 0.8 percent. However, industrial production (YoY) came in at -1.8 percent versus a survey of only -0.8 percent, and manufacturing production came in at -2.5 percent versus the -1 percent expected. The trade balance came in positive, probably because of a weak pound over the last few months, at +7,715 million Pounds versus the -350 million pounds expected. As a consequence, the Pound rallies 0.17 percent versus the U.S. dollar, trading at 1.2936. The doubts surrounding the chances of the U.K. reaching a trade deal with the European Union before its transition is keeping the direction of the Pound blurry for the next few days.

The Aussie dollar rallies strongly versus the U.S dollar this morning due to a positive mood in the capital markets and the S&P 500 touching new highs in overnight trading. The AUD/USD pair trades at 0.6772 at the time of this writing.

The Euro held close to a four-month low against the U.S. dollar, trading at 1.0889, an intraday low, as market participants assess the impact of the death toll from the coronavirus, and while uncertainty has emerged in Europe over who will succeed German Chancellor Angela Merkel. The ECB’s policy meeting in January revealed that a rate hike isn’t on the horizon. It also implied its long-awaited strategic review wouldn’t deliver anything meaningful in the next few weeks. This uncertainty is likely another reason for the Euro’s weakness.

Expected Ranges

USD/CAD: 1.3224 - 1.3309 ▼

EUR/CAD: 1.4416 - 1.4573 ▼

GBP/CAD: 1.7063 - 1.7340 ▲

AUD/CAD: 0.8906 - 0.8955 ▲

NZD/CAD: 0.8484 - 0.8636 ▲