Home Daily Commentaries Demand for USD surges to two-month highs, knocking down CAD

Demand for USD surges to two-month highs, knocking down CAD

Daily Currency Update

CAD - Canadian DollarThe US dollar gained momentum against all major currencies after the US Federal Reserve signalled it might raise interest rates earlier than they had anticipated. USDCAD was up 0.43% to 1.2326 at the time of writing. For individuals and businesses planning to transfer US dollars to euros, pounds, Australian dollars or New Zealand dollars, now could be a good time.US Fed policymakers have moved the timeline on when they would consider an interest rate hike significantly forward. Up until yesterday, the central bank maintained that rates in the US would stay close to zero through 2024. But there is now an expectation that there could be two rate hikes in 2023. This could keep demand for USD buoyant in the near-term.

Key Movers

The Fed announcement knocked down the pound over 1%. GBPUSD moved below the psychological 1.40 level. The news also had knock-on effects on the euro, which has helped GBPEUR edge slightly higher. The four-week delay to the end of UK lockdown restrictions have also kept pressure on the pound. With inflation on the rise in the UK, there is speculation that the Bank of England may have to tighten monetary policy sooner than it initially anticipated. This may govern movement with the pound in the coming months. Other commodity currencies like the Australian dollar and the New Zealand dollar also fell. AUDUSD was down 0.62% to 0.7561 and NZDUSD fell 0.64% to 0.7007 at the time of writing.

Expected Ranges

  • EUR/CAD: 1.4686 - 1.4771 ▼
  • GBP/CAD: 1.7147 - 1.7217 ▲
  • AUD/CAD: 0.9318 - 0.9386 ▼
  • USD/CAD: 1.2159 - 1.2344 ▲