Global markets are on the upswing this morning after China’s central bank announced a package of measures designed to kick-start China’s sluggish economy. Most notably, the People’s Bank of China said it would cut its benchmark interest rates and lower the cash reserve requirement for banks to spur more lending. This, combined with last week’s 50 basis point interest rate cut by the Federal Reserve in the U.S., has injected more optimism into global markets.
As a result, traditional safe-haven assets and currencies such as the Swiss Franc, Japanese Yen, and the U.S. dollar have seen broad weakness. The U.S. Dollar Index, a measure of the U.S. dollar against other major currencies, is at its weakest level since July 2023 and has dropped 5% since June.
This global optimism has helped the Canadian dollar gain about half a cent against the U.S. dollar, and it is now trading at its highest level for the month. Markets will be looking to Bank of Canada Governor Tiff Macklem’s comments on Tuesday at the International Finance and Canadian Bankers Association Canada Forum in Toronto. After that, attention will turn to Friday’s Canadian GDP numbers. Any positive economic news could continue to weaken the U.S. dollar, while data that falls short of expectations could cause the Canadian dollar to lose ground.
The Canadian dollar is currently trading at 1.3464 CAD against the US Dollar.
