Home Daily Commentaries The Canadian dollar falls to the weakest level since November 2020

The Canadian dollar falls to the weakest level since November 2020

Thursday 15 September, 2022

Daily Currency Update

The US dollar soared to 1.3240 versus the Canadian dollar, representing a 0.48% increase, the strongest level since November 4th 2020. Despite Canada's August home sales falling only 1% month to month versus the -1.6% expected. However, this did not help the Canadian dollar to pare losses. The Canadian dollar also lost against the Euro and Japanese yen by 0.64% and 0.22%, respectively. Canada's central bank raised its benchmark interest rate to 3.25% last week, a 14-year high and the highest policy rate among G10 central banks; however it is dangerous to assume the Bank of Canada is done with its moves because nobody knows what the neutral rate, nobody knows where rates are in a restrictive territory ( slowing down the Canadian economy's growth) or in an expansionist territory, where there is more liquidity pumped into the Canadian economy (pushing Canadian economic growth to the upside). There is too much uncertainty with many external variables such as global geopolitical issues and global inflation. They all directly affect the Canadian economy, and the Canadian dollar. According to Royce Mendes, head of macro strategy at Desjardins, "pinpointing the neutral rate in this environment is like trying to hit a moving target while blindfolded."

Key Movers

Headlines from Japanese media showed that the Bank of Japan conducted 'rate checks' for USDJPY at around 144.9. This might mean that the Bank of Japan could intervene in the FX market anytime. The US dollar continues to be king, beating the Aussie dollar, British pound, Canadian dollar and Japanese yen by 0.68%, 0.61%, 0.48%, and 0.26% respectively. The Nasdaq 100 fell over 2% along with the S&P 500 and the Aussie dollar lost around 0.8%, falling towards the lowest level since July at 0.6697.

Expected Ranges

  • EUR/CAD: 1.3121 - 1.3234 ▲
  • GBP/CAD: 1.5141 - 1.5196 ▲
  • AUD/CAD: 0.8854 - 0.8905 ▼
  • USD/CAD: 1.3154 - 1.3240 ▲