Loonie remains stable with a potential upside
Tuesday 28 March, 2023
Daily Currency UpdateThe Canadian dollar has shown little weakness against the USD in the early trading session while maintaining its ground and showing a possibility for upward movement. USD/CAD was last seen trading around 1.3660. Hints of easing stress in the global banking sector, an uptick in oil prices, a signaled pause in policy from the Bank of Canada, and a general risk appetite in the market all favored the Loonie in the last few days. Looking ahead, the CAD’s performance will depend on a range of factors, such as the ongoing US and Canada trade negotiations, Canada’s Annual Budget release today, and fluctuating oil prices. The direction of oil and gas prices will be particularly crucial for the CAD, given Canada’s role as a major exporter. Overall, while the CAD may face some short-term headwinds due to the ongoing global economic conditions, the long-term outlook and sentiments remain positive. West Texas Intermediate oil oscillates near $73.00 a barrel after posting the biggest daily jump in 10 months.
Key MoversUSD showed a mixed performance against other major currencies. Due to worries over the global banking system crisis, the greenback is in a vulnerable state and continues to trade on a softer footing. Recent data releases show housing prices in the US rose by 0.2% month-over-month in January, this reading came in better than the market expectations for a decrease of 0.6%. This marginal increase in the housing price index had little to no impact on the USD’s performance. The dollar index (DXY) is down by 0.27%, trading at the 102.55 level. Today’s low performance may be attributed to short-term market factors like fluctuations in risk sentiment, uncertainty surrounding the upcoming US presidential elections, and mixed economic data releases around the world. This could also be attributed to The Federal Reserve’s less hawkish outlook and slowly easing fears of a banking crisis, which have both weighed on the USD to keep it in a defensive zone. The takeover of Silicon Valley Bank by First Citizens Bank & Trust Company helped calm widespread banking fears.
The EUR/USD pair gained traction and rose to fresh daily highs near 1.0850. The US dollar weakness across other major currencies combined with the risk-positive market environment is facilitating the increase of this pair.
The sterling is holding firm on yesterday’s top numbers as well. GBP/USD held its ground around the 1.2300 level, just below the pair’s monthly high. This support for GBP also came from the fact that the Bank of England governor, Andrew Bailey, emphasized that interest rates may have to move higher if the indications of inflationary pressure remain persistent.
- EUR/CAD: 1.4737 - 1.4811 ▼
- GBP/CAD: 1.6769 - 1.6843 ▲
- AUD/CAD: 0.9071 - 0.9134 ▼
- USD/CAD: 1.3632 - 1.3702 ▼