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CAD strengthens against broadly weakening USD

Wednesday 23 June, 2021

Daily Currency Update

CAD - Canadian DollarThe Canadian dollar strengthened against the US dollar after Federal Reserve Chair Jerome Powell pulled back slightly from last week’s rhetoric and reassured markets that the central bank would not rush to hike interest rates. USDCAD was down 0.30% to 1.2267 at the time of writing.USD gave up ground to all major counterparts, excluding the yen after Powell’s testimony. The dollar also edged lower following the release of US manufacturing and services PMI data.CAD also benefited from rebounding oil prices, after a report on US crude inventories confirmed a tightening market as fuel becomes more in demand for regions like Europe and North America where travel is opening up again. On the other hand, retail sales in Canada fell 5.7% in April and 3.2% in May. The weak retail sales numbers mirror a decline in jobs during those two months, with employment falling by 275,100.

Key Movers

The Eurozone posted more positive data on Wednesday morning as flash services and manufacturing PMIs came in better than expected. Both sectors showed an expansion, and the euro has benefited as a result. EURUSD climbed 0.21% to trade at 1.1964 at the time of writing. There seems to be a turn in the tide for sterling over the course of the week as GBPUSD marched back towards the 1.40 handle in the run up to the Bank of England meeting on Thursday. Traders seem to have greater expectations for this meeting, with vaccinations still progressing well and inflation just above target. If Governor Andrew Bailey provides an upbeat message for the future of the UK economy, the pound could break the $1.40 handle against the US dollar. GBP was up 0.35%, trading at 1.3994 at the time of writing. The Australian dollar continued to recoup losses suffered in the wake of last week’s post FOMC meeting. Given more measured messaging from Fed officials this week, we expect the AUD will maintain its recovery, slowly edging back toward 0.76 and 0.77. AUDUSD climbed 0.54% to 0.7591 at the time of writing.

Expected Ranges

  • EUR/CAD: 1.466 - 1.4741 ▼
  • GBP/CAD: 1.7153 - 1.7233 ▲
  • AUD/CAD: 0.9285 - 0.9321 ▲
  • USD/CAD: 1.2258 - 1.2383 ▼