Daily Currency Update
CAD - Canadian DollarDespite yesterday's risk aversion, the Canadian dollar was a good performer. The Loonie has not entirely enjoyed the commodity currency rally over the last few weeks. However, yesterday, it rallied versus the Aussie dollar by +0.63% and the Kiwi dollar by +0.52%. It even outperformed the US dollar yesterday by a meager 0.04%, due to the extremely weak price action of the Greenback. It is important to mention that it is atypical to have the Loonie stronger than the US dollar in a risk off environment such as yesterday. The reason was an oversold Looonie.Market participants have been very optimistic over the last few days about another US fiscal stimulus, but the US and China spat continues to weigh in the markets. This morning, Canada’s dollar is weaker as global share prices fall amid concerns that rising U.S.-China tensions will hamper recovery efforts. China ordered the closure of the U.S. consulate in Chengdu in retaliation for the U.S. demanding their Houston consulate be closed.
Key Movers
The Greenback falls to the lowest level since January, despite the risk aversion yesterday and today. The US dollar decreased to a more than six-month low as momentum picked up, while the Japanese Yen increased against all its major peers. The US dollar was already on the back foot, following the Euro, which got a boost from the European Union’s deal on the 750-billion-Euro ($871 billion "USD") economic recovery fund.The Mexican peso strengthened for the first time in three days following a falling U.S. dollar, and despite May output data confirming a worse-than-expected recession in Mexico. The May economic activity index (IGAE) collapsed 22.73% y/y, more than the consensus estimate of a 20.30% contraction and the economy shrank 2.62% on a month-over-month basis vs. expectations of a 0.98% drop. The USD/JPY fell 1.0% to 105.81, setting a fresh four-month low at 105.76, and the EUR/USD pair is up 0.3% to 1.1624 and it is trading at its highest level since September 2018 and it is on track for its fifth straight weekly gain.
Expected Ranges
- USD/CAD: 1.3400 - 1.3499 ▲
- EUR/CAD: 1.5600 - 1.5650 ▲
- GBP/CAD: 1.7161 - 1.7211 ▲
- AUD/CAD: 0.9430 - 0.9535 ▼
- NZD/CAD: 0.8844 - 0.8910 ▼