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Canadian dollar mirrors equities decline

Daily Currency Update

CAD - Canadian DollarThe Canadian dollar declined suddenly this morning as equity markets tumbled downward. As has been the case since COVID-19, the Canadian dollar has moved in lockstep with equity markets.The US dollar gained against the Canadian dollar, and it pushed USDCAD from 1.30 to breakthrough 1.313. As of writing, the S&P 500 and other equity markets were being sold off. This risk sentiment was reflected into currency markets.We’ve seen the equity markets recover from lows in early March and the Canadian dollar has gained value in lock step against the US dollar during that same time frame.

Key Movers

URGBP continued to tread water around the 1.1250 handle. Brexit headlines re-emerged as parliaments around Europe returned after their summer. Michel Barnier, the European Union’s chief negotiator, was downbeat yesterday on the chances of a deal being done by the end of the year. Barnier stated he was "worried and disappointed" about the slow progress after meeting members of the UK delegation yesterday. There is a full round of further negotiations next week. Barnier has stated that a deal must be done by the end of October to leave time for it to be ratified for the new year.The AUD drifted lower through trade on Wednesday amid weaker than anticipated Q2 GDP data and a sustained USD bear market bounce. Second quarter GDP data showed the economy contracted at its fastest pace on record, plunging 7%, well beyond market estimates at 6%. Analysts had anticipated a sharp adjustment as the country grappled with the effects of COVID-19 imposed lockdowns but the larger than expected decline suggests the RBA will need to do more to fuel the economic recovery with a return to pre-covid levels not expected until at least 2023.

Expected Ranges

  • EUR/CAD: 1.543 - 1.554 ▲
  • GBP/CAD: 1.735 - 1.743 ▼
  • AUD/CAD: 0.954 - 0.957 ▼
  • USD/CAD: 1.304 - 1.315 ▼