Tumbling oil prices keep Loonie under pressure
Tuesday 2 May, 2023
Daily Currency UpdateUSD/CAD is rebounding, trading in the 1.3535-1.3540 range. Depressed crude oil prices continue to undermine the Loonie amidst concerns that a greater global economic downturn may decrease fuel consumption. The markets are focusing on the upcoming Federal Open Market Committee policy rate decision on Wednesday. The US dollar touched a new two-week high ahead of an expected 25 basis point (bps) rate hike by the Federal Reserve which provided a supplementary boost for the pair. Apart from these factors, the US bond yields may continue to drive the currency pair upward, which along with oil price undercurrents, may push USD/CAD even higher. Crude oil remained depressed and under bearish pressure trading near 73.16. Markets are anticipating a further decline to 72.50 levels in the upcoming days.
Key MoversThe Reserve Bank of Australia (RBA), in a very surprising move this morning, hiked rates by 25 bps, this was unexpected as the markets were not anticipating any change.
The EUR/USD pair was play defense after losing its upward momentum. The European Central Bank (ECB) is expected to hike rates by 25 bps in its meeting on Thursday. Retail sales in Germany contracted 8.6% year-over-year in March, while Manufacturing Purchasing Manager’s Index (PMI) data in Germany and the Eurozone were recorded at 44.5 and 45.8, respectively. EUR/USD tumbled to the 1.0950 levels following the ECB's Bank Lending Survey which revealed the negative effect of soaring interest rates on financing conditions. In the meantime, the annual core Harmonized Index of Consumer Prices in the Eurozone edged lower to 5.6% in April from 5.7%.
GBP/USD again was on the bearish side and lost its traction dropping below the 1.25 mark. It was last seen trading near 1.2455. March data continued to exhibit UK inflation numbers above the double-digit level for 7 consecutive months. This suggests the Bank of England (BoE) is not done pausing rate hikes. The UK Manufacturing PMI was revised at 47.8 for April as compared to the 46.6 estimated in the flash reading.
- EUR/CAD: 1.4843 - 1.4969 ▲
- GBP/CAD: 1.6902 - 1.7006 ▲
- AUD/CAD: 0.8975 - 0.9103 ▼
- USD/CAD: 1.3529 - 1.3628 ▲