Home Daily Commentaries Canadian dollar advances against dollar

Canadian dollar advances against dollar

Daily Currency Update

US unemployment claims didn’t come in as expected, and the Canadian dollar strengthened against the US dollar in trading this morning.
The US Department of Labor reported 963,000 unemployment insurance claims, a drop of 228,000 from the previous week and better than what many forecasted.
The dollar Index fell 0.3%, its lowest level since August 7, and appeared poised to break back below 93. However, gains against the yen and a dour GDP outlook in the UK helped counter losses suffered against the euro and commodity led counterparts.
The USD/CAD pair is lower for the fourth straight day of trading.

Key Movers

More positive signs from the Eurozone. Industrial production showed a strong rebound for the second month in a row, and it wasn’t quite as good as expected. It posted a 9.1% gain. The euro shows no signs of wavering as it continues to outperform the pound and the US dollar.
The pound slipped yesterday after news of a technical recession hit the media. The break of the news itself didn’t weaken the British currency too greatly, however it continued to slip across the day against its major peers. With the Gov’s ‘Eat Out’ scheme, it is likely we shall see a far more attractive reading in Q3, unless of course the nation is forced back into lockdown. On the flip side, it is likely the UK will face mass unemployment in October once the furlough scheme ends.
The Australian dollar finished higher on the day, buoyed by improvements in risk appetite and a broad-based USD sell off. The AUD was dragged back through 0.7150 as US equities signaled a firm shift back to risk, posting near record highs while downward pressure on real term US interest rates continued to weigh on the world’s base currency. The AUD appears well bid on moves approaching 0.7080/0.7100 and we expect that ongoing pressure on the USD will fuel further upside and an extension beyond 0.7230 moving through the weeks ahead. However, as US Fiscal stimulus negotiations remain unresolved, investors appear reluctant to extend the current bounds and a period of consolidation will likely hold until a final announcement is made. With talks again at an impasse, concern is mounting a short-term fix will not be found.

Expected Ranges

  • EUR/CAD: 1.559 - 1.581 ▼
  • USD/CAD: 1.319 - 1.325 ▲
  • AUD/CAD: 0.946 - 0.951 ▲