CAD struggles as USD scales 20-year highs
Tuesday 14 June, 2022
Daily Currency UpdateThe Canadian dollar fell against the US dollar as demand for the USD kept going higher on Tuesday as the market awaited the US Federal Reserve's interest rate policy decision on Wednesday. Investors continued the flight away from equities and commodities and into safe-haven assets like the US dollar amid fears aggressive central bank re-adjustments and sustained inflation pressures will plunge the global economy into recession.
Data released on Tuesday showed Canadian factory sales climbed 1.7% to $72.3 billion in April. The market has nearly fully priced in a 75-basis-point-rate increase by the Bank of Canada at its next policy announcement next month, with rates expected to 4% next year. USDCAD was up 0.31% trading around 1.2933 at the time of writing.
Key MoversThe pound struggled against the dollar and the euro on Tuesday amid concerns around a new Brexit trade war with the European Union and the possibility of a new Scottish independence vote. GBPEUR was down 1.09% trading around 1.528 while GBPUSD was down 1.05% around 1.2006 at the time of writing. With the UK economy already battling generational inflationary pressures and lackluster growth another trade war could well see the GBP sink below 1.20.
The euro failed to escape the risk off shift, staying below 1.05 on Tuesday. The threat of another trade spat with the UK and weaker than anticipated domestic economic data weighed on the single currency through the start of the week. With the European Central Bank now committing to normalize monetary policy, we do expect the euro will find support on moves approaching year to date lows. That said, if the ECB fails to keep pace with the Fed and the policy gap continues to widen a break nearer parity is not off the table. EURUSD was up 0.04% trading at 1.0414 at the time of writing.
- EUR/CAD: 1.3412 - 1.3523 ▲
- GBP/CAD: 1.5498 - 1.5722 ▼
- AUD/CAD: 0.8886 - 0.897 ▼
- USD/CAD: 1.2842 - 1.2939 ▲