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CAD edges lower against USD after Fed minutes

Thursday 6 January, 2022

Daily Currency Update

The Canadian dollar edged lower against the US dollar this morning as data showed Canadian exports climbed to a record high and investors continued to digest the Fed's meeting minutes from Wednesday. USDCAD was trading around 1.2755 at the time of writing. Demand for the US dollar climbed across the board yesterday following the Federal Reserve's December policy meeting which bolstered market expectations for a faster-than-expected rate hike. This morning the US dollar pared its gains against its major peers, with the US Dollar Index sitting at around 96.18. The latest FOMC minutes, while offering few surprises; affirmed the central bank’s hawkish bent and pushed up expectations of a March interest rate hike. Almost 80% of the market now anticipates rates will be lifted leading into Q2, prompting an uptick across US treasury yields and a downturn across risk assets. ADP employment data yesterday reported its single largest increase in private payrolls last month since May.

Key Movers

The UK government’s continued stance to protect its economy from further damage from COVID-19 lockdowns has been deemed by the market as positive. GBP has performed well over the holiday period and started January on the front foot. Having tested a break above 1.36, GBPUSD has shifted back toward 1.3530 while the EUR gave up 1.1340 and sits only marginally above 1.13 at the time of writing. Central Bank policy guidance and change will continue to drive direction through Q1 for as long as markets are prepared to set aside concerns surrounding the latest spike in COVID-19 numbers and the pandemic’s ongoing evolution.

Expected Ranges

  • EUR/CAD: 1.4388 - 1.4477 ▼
  • GBP/CAD: 1.7218 - 1.7311 ▼
  • AUD/CAD: 0.9136 - 0.9231 ▼
  • USD/CAD: 1.2694 - 1.2812 ▼