News & Analysis
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Yesterday saw the loonie rally some 0.83% against a broadly softer dollar. The loonie joined other commodity currencies in the G10 such as NOK, AUD and NZD as the risk-on mood helped take some more of the edge off of the dollar.
Today’s release of the Spring Business Outlook Survey by the Bank of Canada could have been a game-changer for the loonie. If it highlighted a significant collapse in social consumption along with a dramatic decline in businesses CAPEX and hiring intentions, USDCAD would have likely screeched higher in a dramatic fashion.
G10 and EM FX are trading with a broad risk on vibe this afternoon, with the dollar lower against AUD, NZD, NOK and CAD, and enjoying some modest gains versus JPY and EUR.
Today, the Bank of Canada’s Contingent Term Repo Facility (CTRF), which offers 1-month funding against Government or provincial debt, is opened.
The US dollar is broadly higher this week, but at this point, it looks like a recouping of some of last week’s sell-off, as opposed to the beginning of another leg of intense dollar buying of the sort seen in mid-March.
The Canadian dollar was among the best-performing currencies against USD on Thursday as the rollercoaster ride in crude oil prices boosted demand for the loonie, however, yesterday’s spike in CAD somewhat calmed down this morning.
Donald Trump has sent oil prices and petro-currencies soaring after saying that he hoped Saudi Arabia and Russia would agree to oil production cuts of 10-15m barrels.
The USD narrative for today’s price action, however, seems somewhat tainted by recent developments in oil markets leading to the recovery of some currencies; and broad negative sentiment for the release of the US jobless claims in the last week of March.
While both the krone and CAD are benefitting from the oil rally, the Norwegian krone is leading in the G10 space. NOK’s faster recovery compared to the Canadian dollar shows that while oil has been the main character in today’s gains.
The loonie has traded within a broad but stable range against the US dollar this week, strengthening overnight as crude oil prices continued to react favorably to jawboning from US President Donald Trump.