CAD climbs to two-month highs against USD
Thursday 13 January, 2022
Daily Currency UpdateThe Canadian dollar climbed to a two-month high against the US dollar as the currency benefitted from USD extending its losses as well as firming oil prices. JP Morgan economists also expect the Bank of Canada will raise its benchmark interest rate at its January 26 meeting, ahead of the central bank’s own timeline for a rate hike, a move which could continue to help boost demand for CAD.
Key MoversThe US dollar weakened again on Thursday after data showed annual PPI edged higher to 9.7% in December and weekly initial jobless claims rose to 230,000 from 207,000. The US Dollar Index was sitting around 94.81 at the time of writing. Having patiently waited for December CPI data, investors appeared underwhelmed on Wednesday as reports showed prices, despite posting their largest annual gain in almost 40 years, were largely in line with analyst expectations and offered little to re-shape or accelerate expectations for Federal Reserve policy change. Markets used the opportunity to deleverage recent USD shorts, selling down the base currency and chasing gains across commodity linked currencies and risk assets. The dollar index fell over half a percent, touching lows not seen since early November. It appears many of the data points driving positive USD price action are already priced in, and the USD could struggle to maintain its recent momentum in the absence of a major move in the rates market.
Recent US dollar weakness helped boost the euro and the pound on Thursday. The pound is now trading above $1.37 against the US dollar for the first time since the end of October, while EURUSD was trading around 1.4590 at the time of writing. The Canadian dollar climbed to a two-month high against the US dollar as well. Some analysts say the currency is benefitting from the USD extending its losses as well as firming oil prices.
- EUR/CAD: 1.4287 - 1.4325 ▲
- GBP/CAD: 1.7111 - 1.7164 ▲
- AUD/CAD: 0.9095 - 0.9128 ▲
- USD/CAD: 1.2456 - 1.2509 ▼