Strong economic activity stabilizes CAD
Wednesday 10 March, 2021
Daily Currency UpdateCAD - Canadian DollarDemand for the Canadian dollar steadied over the last few days as equity markets trembled and oil prices surged.Following comments from Federal Reserve Chair Jerome Powell, equity markets dropped and drove demand for the US dollar. But earlier in the morning, OPEC+, led by Saudi Arabia and Russia, confirmed that it would not increase production. The price of oil rose to $65 a barrel.Canadian economic activity grew in February at the fastest pace in six months as employment picked up, Ivey Purchasing Managers Index (PMI) data showed on Friday. The seasonally adjusted index rose to 60.0 from 48.4 in January, its highest since August and the first time in three months it was above the 50 threshold indicating an increase in activity. The Ivey PMI measures the month-to-month variation in economic activity as indicated by a panel of purchasing managers in the public and private sectors from across Canada.
Key MoversURUSD fell sharply in the past 24 hours with it making a decisive break below 1.20 on the back of Powell's comments. Only just last week it reached 1.2250. However, a rapid repositioning from investors considering rising bond yields and rising coronavirus cases in some parts of the EU have seen the single currency sold off in dramatic fashion.It was a mixed bag for GBP to end the week. Demand for USD pushed GBPUSD below 1.39 from a high of around 1.40 briefly seen yesterday afternoon. Events from across the Atlantic have been the main catalyst for the move after comments from Federal Reserve Chairman Jerome Powell prompted another round of dollar buying. Despite GBPUSD being lower this morning, the outlook for GBP remains positive considering the rising number of coronavirus vaccinations paired with a falling number of cases. The UK should hopefully see a strong economic rebound from April onwards.The Australian dollar fell sharply overnight, giving up 100 points and marking intraday lows at 0.7710. Having tracked sideways for much of the domestic session, the AUD appeared to be gaining some upward momentum, pushing through 0.78 to touch 0.7813 through the early stages of the European session. It then bounced between 0.7780 and 0.7810 through much of the evening before a steep and sharp correction. The AUD tumbled steeply toward 0.77 US cents as bond market volatility again drove a push toward haven assets and treasury yields.
- EUR/CAD: 1.508 - 1.519 ▲
- GBP/CAD: 1.75 - 1.763 ▲
- AUD/CAD: 0.970 - 0.982 ▲
- USD/CAD: 1.257 - 1.272 ▼