Home Daily Commentaries Canadian dollar hovers near 2-week high

Canadian dollar hovers near 2-week high

Daily Currency Update

The Canadian dollar remains below 1.35, staying close to a 2-week high of 1.34 reached last week against the USD, as investors await the Bank of Canada’s (BoC) monetary policy meeting outcome on Wednesday. The BoC rate hike expectations remain on the fence as markets are currently anticipating an unchanged interest rate of 4.5%, but there is a chance for the central bank to resume hikes. Recent data showed consumer prices rose by 4.4% annually in April, surpassing the forecasted 4.1% increase, and breaking a streak of 10 consecutive months of slowing inflation amid sharp mortgage and rent cost increases. In oil news, the Organization of the Petroleum Exporting Countries (OPEC) meeting on Sunday included further crude oil production cuts by Saudi Arabia to a total output of 9 million barrels a day, down 1 million barrels a day. This was the primary driver for the Loonie’s relatively strong opening this week. Oil is currently up 2.44%, selling at 73.579 a barrel at the time of writing.

Key Movers

The dollar index (DXY) is up to 104.3703. Markets are weighing in a 30% chance for a Federal Reserve rate hike this month after strong jobs data report on Friday. The Services Purchasing Manager’s Index (PMI) from the Institute for Supply Management (ISM) reported an industry expansion at 50.3, slightly below the forecasted 52.6. This shows growth in the services sector for the fifth month in a row. The sector has seen growth in 35 of the last 36 months, with December 2022 being the outlier. ISM Services Employment data for May reported a slight decline in the non-manufacturing employment numbers from 50.8 in April to 49.2 in May. Factory orders data month-over-month came in below the forecasted 0.8% at 0.4%. However, this is still a rise in factory orders for the fourth positive move in the last five months.

The EUR/USD pair started the week on the defensive, below the 1.0700 level ahead of European Central Bank (ECB) President, Christine Lagarde’s comments. Lagarde commented that there is no clear evidence of underlying inflation peaking, inflationary pressures remain high, and wage pressures have strengthened further. In data news, German final services PMI data came in at 57.2 which was slightly below expectations of 57.8, but still stronger than the Euro area’s final services PMI of 55.1.

Swiss consumer price index (CPI) data increased by 0.3% in May, matching its forecasted value and bringing its index level total up to 106.3. This increase over the previous month is due to rising prices on rental houses, holiday packages, fresh produce, and other food products. Inflation in Switzerland is up 0.2% with domestic product prices up 0.3% and imported product prices up 0.1%.

Expected Ranges

  • EUR/CAD: 1.43407 - 1.43854 ▼
  • GBP/CAD: 1.66212 - 1.67162 ▼
  • AUD/CAD: 0.88488 - 0.88804 ▲
  • USD/CAD: 1.34161 - 1.34519 ▲