Home Daily Commentaries CAD underperforms on risk aversion, pipeline delays

CAD underperforms on risk aversion, pipeline delays

Monday 12 December, 2022

Daily Currency Update

The Canadian dollar is joining other risk friendly currencies that are underperforming the USD to start the week.  Oil prices have stabilized, and stocks remain low.  Adding to pressure on the dollar is the continued shutdown of the Keystone Pipeline after a spill last week into a Kansas creek.  The cleanup timeline has been extended as efforts are more difficult than originally expected.  With no real data this week in Canada, it is likely that the CAD will be vulnerable to movement caused by high level data south of the border.

Key Movers

The US dollar is beginning the week stable against other majors as the USD Index (DXY) is down slightly at -0.06%.  Data on Monday is relative quiet with only the monthly budget statement being released today.  Major data then takes center stage on Tuesday with the release of CPI Inflation numbers, expected to be at 7.3% versus the 7.7% we saw last month.  This will be followed on Wednesday with the Federal Reserve Bank’s interest rate announcement.  Markets are currently pricing in a 74.7% chance of a 50-point hike with the other 25.3% of bets on a more aggressive 75 point bump. The GBP got some help against other currencies in European trading. As the Gross Domestic Product grew by 1.5% Year-over-Year.  This was better than the 1.3% markets were looking for. Many of the APAC currencies were down in overnight trading as markets struggle with the adjustment to China putting an end to COVID-19 restrictions.  There are remaining concerns that the lack of Vaccines in China may lead to further health concerns as things reopen. The Aussie dollar is the biggest underperformer as concerns around China are putting pressure on the resources that Australia provides to the world’s biggest manufacturer.

Expected Ranges

  • EUR/CAD: 1.4355 - 1.4453 ▲
  • GBP/CAD: 1.6691 - 1.6809 ▲
  • AUD/CAD: 0.9230 - 0.9279 ▲
  • USD/CAD: 1.3636 - 1.3678 ▲