Home Daily Commentaries The Loonie continues to fall following the BoC’s 50 basis points cut and as we await Poloz’ remarks later today.

The Loonie continues to fall following the BoC’s 50 basis points cut and as we await Poloz’ remarks later today.

Daily Currency Update

CAD - Canadian DollarThe Loonie weakens this morning against G10 currencies and along with commodity currencies. At the same time, safe-haven currencies (e.g. the Japanese Yen and even the Euro) soar, supported by demand for safety due to a continued stream of bad news about the coronavirus. After the 50 basis points interest rate cut by BoC yesterday, the Loonie has lost its resilience among the G10 pairs. Usually, the Loonie is one of the least volatile currencies in comparison with the Aussie and Kiwi dollar; however, this situation has changed over the last few hours. The Loonie is falling 0.31, 0.05, and 0.36 versus the U.S. dollar, Aussie dollar, and Kiwi dollar, respectively. The most crucial piece of information for the Loonie today will be Stephen Poloz’s speech at 1:00 pm EST, which will include his Economic Progress Report. This speech will take place as part of the Women in Capital Markets event at the Fairmont Royal York Hotel in Toronto.

Key Movers

With central banks around the world, including the Fed, taking action to mitigate the economic impact of the spread of the coronavirus, the only thing for sure is an increase in FX volatility. However, Fed action is not enough to calm market participants, especially in the U.S., where the Greenback continues in a free-fall mode after the coronavirus continues to bring bad news to the financial markets. Market participants are awaiting a more robust policy response to the coronavirus pandemic. Meanwhile, U.S. lawmakers agreed on a $7.8 billion emergency spending bill to fund the government’s response to the virus. The coronavirus is threatening the U.S. job market; for instance, tomorrow's change in nonfarm payrolls is projected to increased 175k in February, below January’s pace of 225k. Just a few minutes ago, U.S. weekly jobless claims came to 216k versus an estimate of 215k, which is not favourable for the U.S. dollar because more individuals are filing for unemployment insurance.S&P Global Ratings expect the global macro impact from COVID-19 to reduce its 3.3 percent global GDP growth projection in 2020 by 50 basis points. They also said that there was a, “…significant reduction in their GDP growth forecast for China.”

Expected Ranges

  • USD/CAD: 1.3333 - 1.3465 ▲
  • EUR/CAD: 1.4860 - 1.5036 ▲
  • GBP/CAD: 1.7283 - 1.7377 ▲
  • AUD/CAD: 0.8815 - 0.8923 ▲
  • NZD/CAD: 0.8417 - 0.8488 ▲