Growth ahead, but recovery will be slow
Monday 19 October, 2020
Daily Currency UpdateCAD - Canadian DollarBusiness sentiment has improved but remains weak across all regions, a quarterly survey released by the Bank of Canada revealed. Businesses expected the pace of the recovery in their sales to slow.After many containment measures were lifted and business activity resumed over the summer months, firms now expect sales to increase from low levels. There are indications the pace of the recovery will slow and be uneven across industries. Although the majority of firms expect the rebound in their sales to continue, one-third of businesses anticipate their sales will not return to pre-crisis levels within the next 12 months.The Bank of Canada conducted interviews from late August to mid-September.The Canadian dollar held steady. It has traded between 1.315 and 1.319.
Key MoversLast week we saw another Brexit deadline pass with no real concessions from the EU or the UK and certainly no agreement reached. However, President of the European Commission Ursula Gertrud von der Leyen stated that the EU negotiating team will return to London at the start of the week to continue negotiations with the UK. Prime Minister Boris Johnson isn’t so optimistic. He confirmed that unless the EU returns to London with further concessions there is no point in continuing. There ultimately needs to be a fundamental change in both parties’ stances if we are to reach a deal before the end of the year.Given the rising cases of Covid-19 throughout the UK, but in particular the North-West and now London, the increased lockdown measures with the tiered system in place and the lack of progress with Brexit talks, it’s a massive surprise at how well GBP is performing. GBPEUR is trading comfortably above the 1.10 handle and GBPUSD heading towards the 1.30 handle.The Australian dollar slid further down, coming off a one week high of 0.7231 against the USD to open at 0.7078 this morning. The AUD took a beating in the last week as employment figures came out showing unemployment figures of 29.5k jobs lost in September. While this did beat forecasted figures of 35k, comments from the RBA indicated that interest rates would be cut down to 0.10% from the current record low of 0.25%. Coupled with strong US retail data released late Friday night, the AUD looks vulnerable for further sell offs and risk sentiment remains weak. In the future, we can expect some major movements on Tuesday as the RBA will release their monetary policy meetings. Showing a detailed record of the RBA’s most recent meeting, it can provide in-depth insights into the economic conditions that influenced their decision on where to set interest rates and indicate if a rate cut is likely in the future.
- EUR/CAD: 1.543 - 1.552 ▼
- GBP/CAD: 1.703 - 1.714 ▼
- AUD/CAD: 0.932 - 0.937 ▲
- USD/CAD: 1.315 - 1.319 ▲