CAD slips against USD to near 3-week low
Daily Currency Update
The Canadian dollar continues to weaken against the USD, nearing a 3-week low as investors worry that US debt ceiling talks are not making progress. The Canadian Federation of Independent Businesses (CFIB) business barometer index, which tracks small business confidence, expectations, and operating conditions across Canada, released a 56.4 rating, up from the previous 55.7. The small business optimism index has been on the rise for 7 consecutive months and is at its highest point in nearly a year. In other industry news, there is a strong sell-off happening amongst precious metals which is contributing to the bullish USD/CAD climb past the 1.36 level. Meanwhile, crude oil prices are down 2.36% to 72.463, contributing to the downward movement of the commodity-linked Loonie.Key Movers
The US dollar index (DXY) resumed strengthening today and built on yesterday’s 2-month high as the debt ceiling debate rages on. The dollar index broke above a descending trend line 2 weeks ago and has continued to strengthen. GDP growth rates released show the value of goods and services produced by the American economy grew 1.3% in the first quarter of this year which was slightly better than the anticipated 1.1% growth. While this came in higher than expectations, it still fell below the last quarter of 2022, showing a 2.6% increase. The release of preliminary GDP Price Index data shows the price of all goods and services has increased 4.2% quarter-over-quarter; this reading is slightly higher than the expected 4.0%. The most recent US Unemployment claims came in below the expected 249,000 mark at 229,000. This data point was above last week’s 225,000, which was revised downward from 242,000. This sustained increase in the last four-week averages could indicate layoffs are accelerating in the US.The EUR/USD pair is decreasing as it appears Germany may be entering a recession. Germany’s GDP fell by 0.3% in the first quarter of this year compared to the fourth quarter of 2022. This was the second consecutive recorded negative quarter for the largest economy in the Eurozone. Markets are keeping a watchful eye on the EUR/USD pair and the German economy.
The Bank of Japan (BoJ) Governor Kazuo Ueda noted that the central bank’s response to cost-push inflation will depend on economic conditions. Ueda added that Japan will see this inflation subside as prices of imported raw materials have likely peaked. The BoJ has remained dovish during this time, focusing on supporting the economy, however, this dovishness indicates that if inflation strengthens the BoJ may decide to change its course.
The GBP/USD pair is also down today as sales volume data released out of Great Britain showed a dip this month. Retailers reported that May was the quickest sales volume decline since February 2009. However, sales volumes are expected to stabilize next month.
Expected Ranges
- EUR/CAD: 1.4544 - 1.5191 ▼
- GBP/CAD: 1.6762 - 1.7167 ▼
- AUD/CAD: 0.8887 - 0.9111 ▼
- USD/CAD: 1.3363 - 1.3656 ▲