The US Dollar has softened considerably over the past few days as traders opt for risk aversion ahead of the all important Federal Reserve monetary policy meeting. With an absence of domestic economic data, the Canadian Dollar is holding relatively steady against the ‘Buck’ (USD).
The Canadian Dollar to US Dollar exchange rate is currently trending in the region of 0.9122.
Over the past month or so the Canadian Dollar has felt the heavy blows from a hard-hitting US Dollar, which has enjoyed a bullish run amidst speculation of a sooner-than-anticipated bank rate revision.
The commodity-correlated ‘Loonie’ (CAD) has also been subject to the fall in global commodity prices. As the 6th largest crude oil and natural gas exporter, the Canadian economy has been suffocated by the commodity price contraction.
Perhaps the most detrimental commodity cut for Canada has been the price of gold. Having hit an 8-month low after the Federal Reserve reduced their monthly asset purchases bullion is set for the first quarterly drop this year. The low prices may lead to a renewed surge in demand however, as Economist Nicholas Larkin explains; ‘There are signs lower prices are stoking demand. In China, the world’s largest gold buyer, volumes for the benchmark spot contract on the Shanghai Gold Exchange reached the highest since June today, the latest data show’.
‘Greenback’ (USD) gains have dropped off over the course of the past few days as traders halt investment ahead of the Fed’s interest rate decision. Should the outlook on monetary policy prove to be dovish the US Dollar is likely to experience a huge declination across the board.
The Canadian Dollar to US Dollar exchange rate has hit a low today of 0.9107.
With an absence of economic data pertaining to Canada the ‘Loonie’ has been subject to changes from foreign currency movement. Perhaps the key reason that the Canadian Dollar is holding steady against the US Dollar is the latter currency’s’ gradual decline.
US data has been mostly negative on Wednesday, although this has hardly registered as traders are holding investment anyway. The Consumer Price Index was expected to fall from 2.0% to 1.9% but the actual result was a disappointing decline to 1.7%. The poor inflation data may act as a barrier for raising interest rates which could spell disaster for the Federal Reserve. Those invested in the US Dollar will have been happy to see an improvement in housing data. The NAHB Housing Market Index was forecast to rise from the previous score of 55 to 56, but the actual data was a jump to 59.
The Canadian Dollar to US Dollar exchange rate has reached a high today of 0.9132.
UPDATE
The Canadian Dollar to US Dollar exchange rate is currently trending in the region of 0.9100.
In the aftermath of the Federal Reserve’s most recent monetary policy decision the US Dollar has generally lost momentum against the majority of its major competitors. The decision to maintain the current benchmark interest rate was perhaps unsurprising, but the timing given on a future hike was seen as particularly dovish. Those invested in the US Dollar will most likely be sick of hearing that a rate increase is ‘still a long way off’.
The Canadian Dollar has gained off the back of a cooling US Dollar. With very little by way of economic data to curtail the movement it is likely that the Canadian Dollar will continue to strengthen against the US Dollar.
