Bank of Canada Cite Concerns Over the Global Economy.
Thursday 31 October, 2019
Daily Currency UpdateCAD - Canadian DollarThe Canadian dollar almost fell over 1 percent yesterday touch 1.3208 after opening the North American session at 1.3090, currently switching hands at 1.3154. Loonie's weakness came from dovish Bank of Canada comments after Governor Poloz and company left interest rates unchanged at 1.75 percent. The BOC hinted at lowering the benchmark interest rate in the not too distant future if economic conditions don't pick up globally and in the United States, the country's number one trading partner. On the domestic front, today, market participants are keeping an eye on Canadian GDP m/m for August and Raw Material Price Index m/m for September. On the technical front, the USD/CAD pairing immediate support can be seen at 1.3157 and 1.3114, while resistance is at 1.3180 the overnight high and 1.3208 yesterday's high. Adding to yesterday's volatility in the afternoon was the highly anticipated interest rate cut from the federal reserve. The FOMC lowered its benchmark interest rate a quarter of a percentage point to 1.5 percent, which was heavily priced in, comments from the Fed have market participants pricing in a pause on a rate heading into the last quarter of the year.Oil prices have slipped 0.60 cents to $54.48 per barrel, and gold is trading higher at 1508 an ounce up over 11 dollars.
Key MoversThe U.S. dollar was the principal mover overnight as it dipped against the major G10 currencies following the decision by the Federal Reserve in the United States to cut benchmark interest rates by 25bps for the third time this year to a range of 1.50 percent – 1.75 percent. Dropping the line in the policy statement of "Will act as appropriate" signaled an end of future rate cuts and was supported by comments by Fed Governor Jerome Powell that the current stance is appropriate.Initial movements higher were supported for the U.S. Dollar Index (DXY) to 98.00 as a stronger than expected Advanced GDP print of 1.9 percent for the third quarter this year was aided by continued consumer and government expenditure. The DXY moved sharply lower to 97.48 following the Fed Reserve announcement.Across the globe, the UK parliament announced that there would be a general election on December 12th, supporting the Great British Pound in its run-up to 1.2900 overnight. The bill flew through the House of Lords, both readings unopposed as the country goes to its first Winter election in nearly 100 years with Brexit firmly in the minds of the public.
- USD/CAD: 1.3148 - 1.3178 ▼
- EUR/CAD: 1.4667 - 1.4720 ▼
- AUD/CAD: 0.9075 - 0.9120 ▲
- NZD/CAD: 0.8404 - 0.8460 ▲