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Loonie remains steady ahead of central bank meeting

Daily Currency Update

The Loonie is trading relatively unchanged near the 1.3475 mark. Any upside for the USD/CAD pair seems to be capped as the US dollar comes under selling pressure. This is following the over-optimistic mood in the market due to investors shifting away from the greenback's status as a safe haven currency, and towards riskier assets. The Bank of Canada (BoC) is scheduled to announce its monetary policy tomorrow with a market expectation for a calm reaction towards the recent unanticipated economic growth, and a move to maintain its policy rate at 4.50%. The BoC believes activity will slow down as higher borrowing costs become more prevalent. The price of oil was up around 80.35 a barrel as the possibility of the Fed reducing its policy rate hikes has overshadowed Chinese inflation data.

Key Movers

The US dollar is once again on the back foot against its major rivals, with the dollar index (DXY) topping off around 102.770 yesterday. With markets reopening today, the DXY has fallen back to its previous week’s lows near 102.00 due to a lack of demand. Investors are now focused on tomorrow's inflation data, with analysts predicting that US inflation will have decreased to 5.2% in March from the previous month's reading of 6.0%. If tomorrow's Consumer Price Index (CPI) reading is in line with or worse than analysts’ predictions, the Federal Reserve would be more likely to lower its policy rate in its next meeting.

The euro experienced a drop from its recent highs achieved over the long Easter weekend, dropping to around 1.08390. With markets in Europe reopening today, the EUR reclaimed its earlier gains as it trades near the 1.09100 mark. Data released today for the Eurozone showed an 0.8% decline in month-over-month retail sales for February. This decline was expected following an 0.8% increase the previous month. On an annualized basis, retail sales fell 3.0%, less than analysts’ predictions of a 3.5% decline.

Like its European counterpart, the pound also slipped over the long weekend, dropping to around 1.23520 before rising back towards the 10-month high achieved in the previous week. The pound currently trades around 1.24340 against the USD. The risk appetite for investors seems to have shifted towards the sterling, in addition to the weakening US dollar, any movement for GBP/USD seems to be on the upside. No UK data is scheduled to be released today.

Expected Ranges

  • EUR/CAD: 1.4666 - 1.4751 ▼
  • GBP/CAD: 1.6723 - 1.6803 ▼
  • AUD/CAD: 0.8966 - 0.9007 ▼
  • USD/CAD: 1.3471 - 1.3542 ▼