Canadian dollar slides amid USD strength
Monday 11 July, 2022
Daily Currency UpdateDemand for the US dollar climbed on Monday as recession fears continued to drive market direction, putting pressure on major currencies like the euro. CAD also lost ground against the US dollar as oil prices and equities fell. The Bank of Canada is expected to match the US Federal Reserve's 75 basis point rate hike in June at the coming interest rate decision on Wednesday. If they match the move by the Fed – or take an even more aggressive stance as some analysts say – then this would be good news for the Canadian dollar.
Last week, US employment data was positive, indicating the job market is still strong despite fears of a recession into 2023. US wage growth continued to grow strongly at 5.1% for average hourly pay, giving more support for the US Federal Reserve to hike interest rates at a more aggressive pace. Some analysts thing a 50 basis point rate hike is guaranteed at the next Fed meeting on July 27, priced in at 93% in the latest reading on the CME Fedwatch Tool. USDCAD was up 0.38% trading at 1.2994 at the time of writing.
Key MoversEURUSD continued to slide on Monday, flirting with parity during the midday US trading session. The euro ended last week as the worst performing currency globally on increasing worries of a deeper and longer recession in the Eurozone. The sell-off of the euro also dragged down the Swiss Franc, which ended the week as the second worst performing currency. The euro’s broad-based decline is marching towards parity against the US dollar. This was triggered by the gas and energy crisis and the prolonged Russian invasion of Ukraine. Europe is now facing the risk of a worse recession than other major economies. The gloomy outlook is potentially tying up the European Central Banks’s hands on monetary policy normalization to combat inflation. The ECB is expected to hike interest rates by 25 basis points this month. EURUSD was trading at 1.0067 at the time of writing.
- EUR/CAD: 1.3079 - 1.3187 ▼
- GBP/CAD: 1.5434 - 1.5587 ▼
- AUD/CAD: 0.875 - 0.8874 ▼
- USD/CAD: 1.2945 - 1.3048 ▲