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CAD lower ahead of Bank of Canada decision

Monday 24 January, 2022

Daily Currency Update

Demand for the US dollar climbed across the board on Monday as tensions continued to rise between Russia and Ukraine, which put pressure on commodity currencies like the Canadian dollar. USDCAD was up 0.68% trading at 1.26657 at the time of writing. On Wednesday, the Bank of Canada is set to make an interest rate announcement an release its monetary policy report. The market is widely expecting a a quarter-point increase and pricing in up to seven interest rate hikes this year.    

Key Movers

The pound and the euro were lower on Monday as market jitters over the Russia-Ukraine situation led some investors to seek safe haven in the US dollar. Data also showed UK business activity grew less than expected in January, with the Purchasing Managers Index (PMI) hitting an 11-month low, but cost pressures stayed high. GBPUSD was down 0.65%, sitting around 1.3463, while EURUSD was down 0.31%, trading at 1.13082 at the time of writing. With US inflation currently at a 40-year high of 7% there is pressure on US Federal Chair Jerome Powell and the rest of the Federal Open Market Committee (FOMC) to act to tackle rapidly rising prices which is squeezing consumer spending power. The consensus is that the current quantitative easing program will be wound up by March with the possibility that rates will also be hiked by up to 0.5% at the same meeting on Wednesday. The US Dollar Index was up 0.32% trading at 95.95 at the time of writing.  

Expected Ranges

  • EUR/CAD: 1.4225 - 1.4328 ▲
  • GBP/CAD: 1.7008 - 1.7054 ▼
  • AUD/CAD: 0.898 - 0.9033 ▼
  • USD/CAD: 1.2555 - 1.2676 ▲