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Bank of Canada raises key interest rate

Wednesday 2 March, 2022

Daily Currency Update

The Canadian dollar strengthened against major currencies on Wednesday after the Bank of Canada hiked its benchmark interest rate to 0.5%, the first time the central bank has raised rates since 2018. This is the first increase in a series of signalled hikes from the Bank of Canada amid economic recovery from the COVID-19 pandemic. EURCAD was down 0.87% at 1.4051, GBPCAD was down 0.42% sitting around 1.6904 and USDCAD was down 0.36% at around 1.2696 at the time of writing. CAD was also supported on Wednesday by soaring oil prices as more market participants shunned crude oil from Russia, which pushed up demand for non-Russian oil. According to some reports, traders struggled to sell Russian oil even at a discount. This comes as the conflict between Russia and Ukraine further intensified in the last few days.    

Key Movers

The devolving situation in Ukraine has driven further demand for safe haven currencies in the past 24 hours, creating more uncertainty for financial markets. In the past 24 hours the US dollar has gained against a basket of major currencies. In times of global uncertainty, investors tend to buy USD as a safe haven currency. The US Dollar Index was up 0.41% trading at 97.81 at the time of writing. EURUSD remained under pressure even as a flash estimate on Wednesday showed Eurozone annual inflation is expected to be at 5.8% in February, up from 5.1% in January. Typically, expectations for a higher inflation reading helps create demand for the euro, but the currency's direction continues to be driven by geopolitical headlines. EURUSD was down 0.36% trading at 1.1083 at the time of writing.  

Expected Ranges

  • EUR/CAD: 1.4041 - 1.4186 ▼
  • GBP/CAD: 1.6894 - 1.6983 ▼
  • AUD/CAD: 0.9205 - 0.9261 ▼
  • USD/CAD: 1.2672 - 1.2748 ▼