CAD edges lower amid poor GDP performance
Tuesday 28 February, 2023
Daily Currency UpdateThe Canadian dollar fell against the US dollar to around $1.36, following the release of mixed economic data. This is the pair’s weakest point since January 3rd. The fourth quarter gross domestic product (GDP) for the Canadian economy was revealed to be stagnant as the annualized real GDP came in at 0%. Following the previous quarter's print of a 2.3 % expansion and failure to meet the market's expectation for 1.5% growth. Recent data further reinforces the likelihood that the Bank of Canada will leave interest rates unchanged in March. Furthermore, the Canadian dollar has also been weighed down by USD bullishness on expectations that the Fed will keep borrowing costs higher for longer. West Texas Intermediate (WTI) crude oil advanced past 76.00 and trades around the 77.00 mark as investors await with optimism for the Caixin Manufacturing Purchasing Managers’ Index data scheduled for Wednesday.
Key MoversThere is a definite cloud over expectations for a further substantial drop in inflation. The Federal Reserve may likely continue to hike interest rates a few more times as a result. With the weaker-than-expected consumer confidence statistics, the US dollar is struggling to find demand. US consumer confidence was shown to have deteriorated modestly in February as the Conference Board’s Consumer Confidence Index fell to 102.9 following January's reading of 106. Today's print came in below the analyst prediction of 108.5. The USD Index began the day trading flat at 104.70 levels before dropping onto the back foot, losing 0.19% on the day and trading around 104.50. EUR/USD advanced for the second consecutive session in a row, breaking through the 1.0600 level. Support for the euro came after data released overnight showed that French and Spanish consumer prices accelerated in February. Suggesting that the fight to control inflation in the eurozone may last longer than initially anticipated. GBP/USD is on the rise for the second straight day as the pair advanced past the 1.2100 mark. The sterling is being supported by optimism that a final deal on the Northern Ireland protocol between the UK and EU will be confirmed. Increasing speculation of additional interest rate hikes by the Bank of England (BoE), as well as renewed selling pressure on the US dollar, are providing support for the GBP/USD pair.
- EUR/CAD: 1.4373 - 1.4482 ▲
- GBP/CAD: 1.6315 - 1.6517 ▲
- AUD/CAD: 0.912 - 0.9169 ▲
- USD/CAD: 1.3545 - 1.361 ▲