Loonie suffers as stocks and equities fall
Wednesday 22 February, 2023
Daily Currency UpdateThe Loonie, which had lost ground yesterday, is holding its position in early trading today. The Canadian dollar was battered from multiple sides as both equities and commodities were falling. Oil saw a drop of over $3 per barrel. The bright spot for Canada yesterday was the release of inflation for January, showing that prices fell more than expected and backing up the recent announcement from the Bank of Canada that they are done hiking rates in order to let higher interest work its way through the economy.
Key MoversThe US dollar saw gains on the USD Index (DXY) yesterday as risk aversion strategies took hold of equity and commodities markets. The Dow Jones closed 2% down on the day and the S&P 500 followed suit with its own 2% decline. Traders seem to be preparing for at least one more Federal Reserve rate hike as we now have 25 basis point hikes priced in over the next 3 Federal Open Market Committee meetings. We should get more clues into future Fed moves with this afternoon’s release of the minutes from their latest meeting. The euro saw mild gains in the overnight sessions, testing recent resistance levels. This small spike came on the back of the German inflation release which showed that inflation had increased to 8.7% from 8.1% in December. This supports European Central Bank Chair, LaGarde’s call to raise rates in the European Union by 50 basis points at their next meeting. The GBP is holding steady against most major currencies after multiple positive data releases show that the British economy is holding strong. Surveys on the Purchasing Managers’ Index data in both the service and manufacturing sectors showed increased confidence in the business environment of the UK.
- EUR/CAD: 1.4376 - 1.4442 ▼
- GBP/CAD: 1.6323 - 1.6419 ▲
- AUD/CAD: 0.9235 - 0.9307 ▼
- USD/CAD: 1.3490 - 1.3559 ▲