Daily Updates

The Canadian dollar is currently trading at 1.3365 (USD/CAD) or 0.74824 (CAD/USD) after reaching its strongest intraday level since May 8 at 1.3322 against the US Dollar.  The Canadian dollar benefitted from a trifecta of positive news on multiple fronts today.

Wednesday’s release of Canadian GDP data surpassed expectations, with the annualized growth rate registering at 3.1%, exceeding the projected range of 2.3% to 2.5%. Will GDP growth, along with strong…

Heading into the Memorial Day long weekend down south, there is tempered optimism that a potential debt ceiling deal is starting to take shape, most likely because politicians prefer not to work on long weekends.

The Canadian dollar hit its weakest level against the US dollar since April 28th, reaching 1.3644 on Thursday. A drop in oil prices and a lack of progress in the US debt ceiling negotiations contributed to the weakening of the Canadian dollar against the US dollar.

The Canadian dollar is approaching a three-week low against the US dollar today as negative market sentiment propels the US dollar higher. The combination of Chinese equity markets moving into negative territory for the year and the rapidly approaching US debt ceiling deadline has led investors to sell riskier assets such as the Canadian dollar and buy safe haven assets such as the US dollar.

Overnight, the Canadian dollar weakened by about ¼ of a penny against the US dollar. However, this morning, both the CAD and USD are underperforming against major global currencies. The USD/CAD pairing has mostly experienced range-bound trading over the last two days, with the exchange rate bouncing between defined levels. All the action occurred earlier this week following the release of higher-than-expected April inflation numbers in Canada. Initially, this news provided a temporary boost to the Canadian dollar, leading to a decline in USD/CAD from a high of 1.3567 to around 1.3400 on Wednesday. However, much of this decline was quickly reversed.

The Canadian dollar has gained another half cent against the US dollar overnight and has now risen by 1.5 cents since yesterday’s low. This surge in the Canadian dollar’s value occurred after the release of higher-than-expected Canadian inflation numbers this morning. In April, inflation rose by 0.7%, surpassing the 0.4% anticipated by analysts. Additionally, on an annualized basis, Canadian inflation increased by 4.4% compared to the expected 4.1%. This has created a more uncertain path forward for the Bank of Canada.

Markets were generally lower on Thursday as investors grappled with understanding the implications of yesterday’s inflation numbers, which came in slightly lower than expected at 4.9% instead of 5%. The ongoing crisis in the US regional banking sector also weighed heavily on the markets, with another US regional bank facing pressure. PacWest’s shares plunged over 20% today after reporting larger than expected deposit outflows. These factors caused nervousness among investors, leading them to seek safe haven currencies like the US dollar. Consequently, the US dollar traded higher against most currencies, including the Canadian dollar. The Canadian dollar dropped by ¾ of a penny this morning and has now lost over a full penny since Monday’s near one-month high.

This morning’s Consumer Price Index Report showed that US inflation cooled to 4.9% in April, slightly lower than the expected 5%. The good news is that this marks the 10th consecutive decline, but the bad news is that inflation remains stubbornly high and significantly far from the Federal Reserve’s target rate of 2%.

Disappointing Chinese import volumes, which are seen as a barometer for global economic strength, and US Treasury Secretary Yellen’s comments about the potential catastrophic global economic impact of not resolving the US government’s debt ceiling, drove markets lower yesterday and this morning.