CAD down ahead of Bank of Canada rate decision
Tuesday 7 September, 2021
Daily Currency Update
CAD - Canadian DollarThe Canadian dollar weakened against the US dollar on Tuesday as oil prices fell and investors awaited the Bank of Canada’s rate decision on Wednesday. USDCAD was up 0.84%, trading at 1.2633 at the time of writing. The central bank is expected to keep interest rates on hold given a weaker than expected GDP print while inflation hit a decade-high. Analysts are not expecting the central bank to announce any reductions to its bond-buying this week. But market watchers will be paying close attention to the speech by BoC Governor Tiff Macklem on Thursday.
Key MoversInvestors remain cautious around being too optimistic about the euro, especially with the European Central Bank meeting looming on Thursday. Klaas Knot of the ECB stated that he is expecting the ECB to begin reducing the pace of its PEPP (Pandemic emergency purchase programme) at the meeting this Thursday with the aim being to end it by March. This is deemed to be positive for the euro, but the ECB has a habit of talking the euro down. So there may be some volatility for both GBPEUR and EURUSD heading into Thursday's lunch time meeting. EURUSD was down 0.22% trading around 1.1844 at the time of writing. Sterling fell yesterday, pulling back from its near month highs against the dollar and 7-day peak vs the euro, with signs emerging that the economic gains made from post lockdown re-openings may be starting to fade. On Wednesday, The Bank of England Governor and several Monetary Policy Committee (MPC) members are set to testify on inflation and the economic outlook before Parliament's Treasury Committee. Any stance deemed to show that the UK's central bank is looking to raise interest rates sooner than expected and taper their asset purchase program will likely provide sterling a boost. Demand for the Australian dollar weakened against the US dollar after the Reserve Bank of Australia announced it would cut its weekly bond purchases to $4 billion from $5 billion as previously planned. The central bank has left interest rates on hold at 0.10%. AUDUSD was down 0.71%, trading at 0.7381 at the time of writing.
- EUR/CAD: 1.4868 - 1.4968 ▲
- GBP/CAD: 1.7327 - 1.7414 ▲
- AUD/CAD: 0.9304 - 0.9346 ▲
- USD/CAD: 1.252 - 1.2635 ▲