Home Daily Commentaries USD/CAD hovers near six-week high

USD/CAD hovers near six-week high

Daily Currency Update

USD/CAD traded near 1.3514, close to the six-week high achieved on September 19th. This strength came on consistently high oil prices and recent inflation data that has increased the probability of the Bank of Canada (BoC) implementing stricter monetary policy measures. West Texas Intermediate (WTI) crude oil futures rose above $92 a barrel. The market continues to be gripped by worries of a tightening global oil supply situation in the lead-up to winter. The US oil benchmark has witnessed an impressive surge of almost 30% since the end of June, partly due to the leaders of the Organization of the Petroleum Exporting Countries (OPEC) decision to extend supply cuts through the remainder of the year.

Key Movers

The US dollar traded near 106.54 to achieve its fifth consecutive day of gains. For the last 40 weeks, the USD has consistently reached new peaks, and this week, the primary factor behind this surge is the ongoing deadlock in Capital Hill. Both the Senate and the House of Representatives are advancing bills to the floor, but these proposals alone may not prevent a government shutdown in October. As the deadline approaches, there is a growing likelihood that the US government will indeed shut down by Saturday, potentially leaving financial markets in the dark about the nation’s macroeconomic status. An extended shutdown would also lead to a hiatus of economic data publications by various agencies. Today’s data highlight is the release of the Durable Goods Orders showing positive movement with a 0.2% increase, beating the forecasts of a 0.5% drop, and showing a significant improvement over last month’s -5.6 %

As September draws to a close, the euro continues its decline as it trades below 1.05200, reaching its weakest point since January 6th and is now set for its most substantial drop since May. Investors brace for crucial inflation data set to be released later this week, with growing expectations that the European Central Bank (ECB) may soon pause its interest rate hikes. ECB President Christine Lagarde mentioned on Monday that policymakers believe the bank’s policy rates have reached levels that would significantly contribute to achieving the inflation target.

The pound trades near the 1.215 mark, falling to its lowest point since mid-March and on track to record its worst monthly performance in a year. Investors are reacting to disappointing economic data and the Bank of England’s (BoE) decision to halt interest rate hikes. Policymakers in the UK are expected to maintain the rates at 5.25% in November due to signs of a loosening labour market and slowing inflation.

Expected Ranges

  • EUR/CAD: 1.4207 - 1.4295 ▼
  • GBP/CAD: 1.6398 - 1.6451 ▼
  • AUD/CAD: 0.8614 - 0.8659 ▼
  • USD/CAD: 1.3491 - 1.3536 ▼