Home Daily Commentaries Canadian dollar losing on oil and equity weakness

Canadian dollar losing on oil and equity weakness

Tuesday 6 December, 2022

Daily Currency Update

After a positive start yesterday morning, it was all downhill for the Canadian dollar as oil prices and equities dropped.  The benchmark WTI oil price lost ground yesterday, closing the day down over $4 a barrel while the major indices shed strength with the Dow Jones alone losing close to 500 points on the day.  This reversal in risk appetite has seen the Canadian go form outperforming other majors to quickly being the most underperforming of the bunch.  Eyes though are on tomorrow Bank of Canada rate announcement as Tiff Macklem and company are weighing a continuation of 50-point hikes against a more moderate 25-point increase.

Key Movers

After starting the day down yesterday against the basket of major currencies, the USD made gains throughout North American trading yesterday which have held through the overnight sessions.  The USD index (DXY) that started yesterday at just over 104 on the index is now up to 105.54.  The moves yesterday were in large part due to stronger ISM and factory order prints, making investors second guess a slower pace of rate hikes from the Fed.  The ISM Non-Manufacturing survey showed an increased confidence amongst purchasing managers at a rating of 56.5. This was both a beat of the expected 53.5 and an improvement from the previous month.  Trade Balance numbers came in early Tuesday showed a better than expected deficit of -$78.2B. The euro is seeing minimal moves today and with a lack of data for the rest of the week, movement on the euro will be tied to broader market sentiment.  Traders will have little to work with ahead of the FOMC announcement next Wednesday and the ECB rate call on Thursday. The USD/JPY cross saw its biggest one-day gain since June in the overnight Asian sessions. This came on the back of general USD recovery as well as comments from BoJ governor Kuroda that that the bank is likely to continue it’s “easy monetary policy”.  In other Asia-Pacific news, the Australian dollar made gains against the USD after the RBA raised it’s rates by 25 points to 3.10%.

Expected Ranges

  • EUR/CAD: 1.4190 - 1.4332 ▲
  • GBP/CAD: 1.6468 - 1.6656 ▲
  • AUD/CAD: 0.9098 - 0.9177 ▲
  • USD/CAD: 1.3437 - 1.3636 ▲