Home Daily Commentaries The Loonie touches an over two-month low following weakness in crude oil.

The Loonie touches an over two-month low following weakness in crude oil.

Daily Currency Update

CAD - Canadian DollarHousing starts increased to 213.2k in January versus an estimated number of 205k. The previous number last month was 196k. Month to month represented an increase of 8.8 percent. However, the Loonie is ignoring the good news and it is falling versus the Pound, Aussie dollar, U.S. dollar and Euro by -0.38, -0.25, -0.04, and 00.1 percent, respectively. Despite the Loonie gaining earlier from the Chinese central bank’s offer of stimulus to counter virus fallout, the Loonie has erased its gains at the start of the North American session. The reason for the Loonie’s weakness is crude oil’s price pointing towards more losses. Furthermore, significant speculative net-long Canadian currency futures positions fell to 18,563, the lowest since the week ending on January 3rd, according to the latest CFTC data. Furthermore, regarding crude oil, an essential commodity for the Canadian economy, a likely possible peace deal in Libya threatens to put even more pressure on the price of crude oil this week, which would also put further pressure on the Loonie. The OPEC and Russia have not yet responded to the coronavirus outbreak. Meanwhile, the coronavirus continues to hurt crude oil demand and prices.

Key Movers

The Euro increased slightly against the U.S. dollar by 0.04 percent after five sessions of losing. So far, the uncertainty of the coronavirus has lifted Asian currency volatility to its highest level in six months and the Greenback to a two-month high. For now, it will be interesting to follow the AUD/JPY and NZD/JPY pairs to know about how risk is increasing or decreasing. Both pairs can be used as proxies for capturing potential volatility in the global currency market.

Expected Ranges

  • USD/CAD: 1.3300 - 1.3340 ▲
  • EUR/CAD: 1.4519 - 1.4575 ▼
  • GBP/CAD: 1.7160 - 1.7282 ▲
  • AUD/CAD: 0.8844 - 0.8923 ▼
  • NZD/CAD: 0.8430 - 0.8535 ▼