The US dollar is up against the Canadian dollar on Thursday morning as traders digest yesterday’s release of Federal Reserve minutes and look forward to Canadian employment data out later. Elsewhere US and Canadian stock markets are pointing to a higher open after the Chinese central bank cut benchmark interest rates.
USD/CAD was higher by 30 pips (+0.20%) to 1.3247 with a daily range of 1.3209 u3 to 1.3257 as of 9.30am GMT.
USD/CAD rose throughout the morning before finding resistance at 1.325 and is basically flat on the week at -0.05%.
The dollar
Other currencies have been at pains to catch up with ‘King Dollar’. Its status as a haven in combination with the series of stronger economic data in the United States have been hard to measure up to. Although equities have largely been discounting the effects of the coronavirus with numerous record highs on Wall Street, forex markets still have a risk-off flavour.
Fed minutes were largely ignored in forex markets because the massive jump in coronavirus cases since the meeting, Powell’s subsequent testimony and the improved US data made them rather out-of-date. The Federal Reserve had a more optimistic outlook on the US economy but there was no major shift in communication. Details of the policy review were non-existent with more detail expected mid-year.
The Loonie
The strength in the greenback has hit some currencies harder than other this week. While the euro and Aussie have plunged to multi-year lows, the Loonie is flat. The relative strength is partly the domestic economic performance and partly oil prices. Canada’s economy is closely tied to the United States, particularly with the new USNMCA trade deal in place. Oil prices have been on the upturn this week on speculation OPEC+ are on the cusp of cutting output with the aim of support oil prices.
Canada employment and housing data is on tap later. The change in employment according to ADP in January should be +71.8k, up from 46.2K in December. The New Housing price index is expected to rise at a steady 0.2% month-over-month.
