Canadian dollar falls despite positive data
Daily Currency Update
The Canadian dollar dipped this morning, being pulled down in an environment of USD strength. Canadian data released this morning showed stronger-than-expected retail sales in January, with headline sales coming in at -0.3%, better than the anticipated -0.4%. More impressive were the sales numbers that excluded the automotive industry, which was up 0.5% for the month, against a consensus expectation of a -0.4% drop. This, alongside rising oil prices, would typically be a positive for the Loonie, but the strength of the USD muted any gains the CAD may normally see. Oil rebounded today after falling off on a higher US dollar yesterday. The benchmark West Texas Intermediate (WTI) price was back over $81 a barrel this morning as reports came out in the overnights that the Organization for Petroleum Exporting Countries (OPEC+) may continue production cuts to keep prices elevated.Key Movers
The US Dollar Index (DXY) was up more than 75 basis points (bps) heading into today’s North American trading session, outpacing every other major currency. Equities markets headed into the session down, driving investors to park funds in US treasuries as a safe haven. After a slump following Wednesday’s Federal Reserve announcement, the US dollar has been regaining position. This climb came as central banks across the globe shifted their tone to a more dovish outlook, leading markets to price in rate cuts from both the European Central Bank (ECB) and the Bank of England (BoE).The EUR was down against the USD this morning amid releases from Germany that showed better-than-expected business conditions in the EU’s biggest economy. The ifo business survey showed a bump to 87.8 on the confidence scale from 85.7 last month. This, combined with lower import prices in the EU, fueled speculation of future rate cuts from the ECB, driving the euro down.
Similarly, the GBP dipped versus the USD this morning after the BoE shifted tone yesterday during its interest rate announcement. The bank took a more dovish tone, announcing the end of rate hikes which had markets pricing in a rate cut as early as June.
Expected Ranges
- EUR/CAD: 1.4670 - 1.4775 ▼
- GBP/CAD: 1.7073 - 1.7192 ▼
- AUD/CAD: 0.8838 - 0.8913 ▼
- USD/CAD: 1.3501 - 1.3620 ▲