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CAD dips on interest rate outlook
Daily Currency Update
The Canadian dollar held its ground against the USD after dipping most of the week. The Loonie increased as rate cuts from the Bank of Canada (BoC) are expected in June cut while the Federal Reserve may hold until the fall. The Loonie ignored recent oil drops though which would have normally had further negative impact. Oil was falling from recent highs as the prospect of “higher for longer” interest rates from the Fed put pressure on businesses and markets weighed the possible expansion of production capacity from The Organization of the Petroleum Exporting Countries (OPEC+). The West Texas Intermediate (WTI) benchmark price was back in the $81 a barrel range after crossing $86 earlier in the week.Key Movers
The US Dollar was down slightly from recent highs but held in the same range it has been over the last two sessions as markets push back rate cut expectations and tensions continue in the Middle East. The S&P Volatility index (VIX) headed back towards a range last seen in the fall following the October 7th attacks in the Middle East. This, combined with markets pricing in the first rate cuts from the Federal Reserve in September, had the USD holding ground. Other central banks, including the European Central Bank (ECB), are predicted to start cuts in June. A lack of data today had markets trading on sentiment which seemed to be favouring the Greenback.The euro was up marginally amid the release of higher-than-expected Germany Producer Prices. The German Producer Prices were released overnight and came in up 0.2% after falling -0.4% previously. The EUR/CAD pair was up 0.20% this morning, trading near 1.4676.
Likewise, the GBP was on the rise against the USD this morning after better-than-expected retail sales in March showed positive movement in the British economy. Headline retail sales were up 0.8% in March after falling -0.4% the previous month. The GBP/CAD pair was up 0.12% to trade near the 1.7142 range.
Expected Ranges
- EUR/CAD: 1.4644 – 1.4715 ▲
- GBP/CAD: 1.7099 – 1.7184 ▲
- AUD/CAD: 0.8788 – 0.8886 ▲
- USD/CAD: 1.3745 – 1.3850 ▼
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