Home Daily Commentaries CAD dips as economy shows signs of contraction

CAD dips as economy shows signs of contraction

Daily Currency Update

Demand for the Canadian dollar fell against USD, the only major currency to do so after the data released this morning showed that the Canadian economy slowed by -0.2% in Q2. This was worse than the expected 1.2% increase that markets were expecting. This dip came despite a hike in oil prices and stronger stock markets, showing a decoupling from the things that have been drivers of the currency as of late. This data could play into the Bank of Canada’s (BoC) interest rate announcement due out next week.

Key Movers

The US dollar index (DXY) was down -0.25% after the North American market opened while commodities and equities rallied. The jobs release for August showed 187,000 job additions in the month, more than the 170,000 that economists had expected. Equity markets are also pointed toward a stronger open heading into the long weekend, taking money out of the US treasuries that had been bolstering the greenback. Still on the docket this morning will be the ISM Manufacturing survey for August which is expected to show a more positive read of 47, up from 46.4 in July.

Oil continued to build on yesterday’s gains, climbing over $84 a barrel this morning after Russia announced an extension to its production cuts during the European trading session. This was paired with a report from the US Energy Information Administration (EIA) that noted stockpiles in the US were down this week.

Expected Ranges

  • EUR/CAD: 1.4635 - 1.4722 ▲
  • GBP/CAD: 1.7093 - 1.7202 ▲
  • AUD/CAD: 0.8718 - 0.8800 ▲
  • USD/CAD: 1.3493 - 1.3553 ▼