Canadian dollar (CAD) Market Update
The Canadian dollar (CAD) has experienced some softening recently, despite an upward trend in oil prices, influenced significantly by its correlation with the US dollar. On Monday, this positive correlation left the commodity-sensitive loonie under pressure, preventing it from capitalizing on the increase in oil prices. FX analysts predict that CAD exchange rates may see further declines today, particularly as the latest consumer price index is anticipated to show a cooling of domestic inflation, which could undermine investor confidence and dampen demand for the currency.
Current exchange rates reflect this softening, with CAD to USD at 0.7361, only 0.6% above its three-month average of 0.7318. The trading range has remained stable between 0.7207 to 0.7438. Meanwhile, the CAD to EUR has dipped to 14-day lows near 0.6611, 1.2% below its three-month average, and the CAD to GBP is at 90-day lows of 0.5569, marking a 1.7% decline from its average. Furthermore, the CAD to JPY is notably at 90-day lows near 103.5, which is a striking 6.4% below its average of 110.6, reflecting a more volatile market environment. With oil, a critical export for Canada, trading at 72.96 USD – approximately 9.3% below its three-month average of 80.4 – market perceptions might continue to weigh on the CAD as it grapples with both external pressures from oil prices and domestic inflation dynamics.