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The loonie is struggling to hold on this morning as the dollar bounces back in G10 FX following last night’s Fed meeting. The Canadian dollar is down almost half a percentage point against its US counterpart, falling from its recent highs.
The loonie is up 0.19% this morning against the dollar, following the likes of EUR and NOK, while oil markets have bounced back to $41.20 ahead of this afternoon’s DoE crude inventory release.
The euro is ranked as the best performing G10 currency against the US dollar over the course of the last two weeks after it broke through the 1.14 level on July 14 for the first time in over four weeks.
The loonie, like the rest of the G10, took a chunk out of the greenback in yesterday’s session. USDCAD fell 0.5% as oil markets swung between losses and gains for the day, with WTI ultimately ending the day marginally higher due to a weaker US dollar.
This week’s dollar weakness was a tale of two halves. The week started off with fresh fiscal stimulus announced by the EU in the form of the €750bn recovery fund, which buoyed market sentiment and led to a risk rally.
The Canadian dollar sat near the top of its post-outbreak range at the end of last week as the US dollar continued to weaken at the margin. With heightened tensions between the US and China along with elevated case counts in the US, the greenback’s weakness spills into this week, allowing the loonie rally to continue.
Yesterday, the loonie capped off a four-day consecutive rally reaching levels not seen in over a month as the dollar spent another day generally declining. However, the Canadian dollar struggled to hold onto much of its gains after the US Covid case data was released at around 11:00ET.
The loonie has continued its positive momentum in this morning’s session as broad dollar weakness continues in markets. The Canadian dollar is up over 1.3% this week as things stand, while WTI is trading back up above $42 a barrel, its highest level since early March.
The Canadian dollar continues to focus on how its US counterpart trades this morning as its rally stops short despite a positive inflation read. Higher shelter, gas and elevated food prices helped the headline CPI index rebound from negative territory in June, posting a 0.7% YoY rise vs -0.4% in May.
After 27 consecutive trading sessions stuck in a 1.7% range, USDCAD finally broke out to the downside on broad USD weakness. Two securities the loonie closely follows, US equities and oil prices, both rose too as the dollar sold-off within FX markets.