Canadian dollar falls as stock market rally fades
Wednesday 21 December, 2022
Daily Currency UpdateThe Canadian dollar declined in value relative to the U.S. dollar on Thursday as the rebound in equity markets lost momentum. USD/CAD surged higher following the release of the US GDP and Jobs Data reports the pair pushed above 1.3650. The strong data reports boosted the US dollar, while the Canadian dollar weakened. Wholesale sales for Canada came in at 1.9% today from previous print of 2.1%. Crude oil prices hit a two-and-half-week amid growing optimism about fuel demand recovery. WTI peaked above 79.000.
Key MoversThe US economy grew at an annualized rate of 3.2% in the third quarter, according to the final estimate released by the US Bureau of Economic Analysis on Thursday. This reading surpassed the prior estimate and the market expectation of 2.9%. Still, many economists expect the economy to slow and probably slip into recession next year under the pressure of higher interest rates being engineered by the Federal Reserve to combat inflation.
The US Department of Labor released data on Thursday which showed a modest increase of 216,000 initial jobless claims in the week ending December 17. This Followed the previous week's print of 214,000
The DXY (US Dollar Index) is currently trading above 104.00 following the release of the economic data.
China's reiteration of its commitment to stimulating economic growth has boosted risk sentiment and the euro was off to a strong start in Thursday's European session. EUR appreciated as flows leave the safe-haven dollar. Furthermore, de Guindos from the European Central Bank (ECB) reiterated a hawkish stance, saying that "50bps may soon become the new standard" in order to combat rising inflationary pressures within the eurozone.
EUR/USD currently holds around the 1.0600 price mark ahead of the US economic Data.
Figures from the Office for National Statistics on Thursday painted a grim picture for the U.K. economy, which was shown to have contracted by more than was initially estimated between July and September. The economy shrank by 0.3% in the third quarter - worse than initial estimate of 0.2% resulting in the British Pound declining after the final UK GDP print was released. Adding to this, the yearly growth rate was also revised down to 1.9% from the forecasted 2 .4% and adds to a bleak outlook for the UK economy.
- EUR/CAD: 1.4421 - 1.4489 ▲
- GBP/CAD: 1.6498 - 1.6388 ▼
- AUD/CAD: 0.9186 - 0.9113 ▼
- USD/CAD: 1.3576 - 1.3659 ▲