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CAD drifts lower in a mixed start to a big week for news

CMC Markets

With traders now all back from holiday, we find global markets have paused while traders catch up on news and get ready for a busy week. Asia Pacific indices sold off hard overnight, knocked back by disappointing service PMI data from China and Australia. European markets have been mixed with Italy’s MIB and Spain’s IBEX posting the strongest gains as a much stronger than expected Spanish service PMI suggested that a turnaround in the more troubled regions may finally be gaining some traction. Core Eurozone and UK indices, meanwhile have been essentially flat with the FTSE and DAX posting small gains and the CAC a small loss. Overnight trading in US indices has been mixed with the Dow and S&P looking to open slightly higher and the NASDAQ slightly lower. Indices appear to be in a holding pattern as traders look ahead to this week’s ADP and nonfarm payrolls. Currency markets have been relatively quiet to start the week with JPY bouncing back a bit and gold posting a moderate gain to suggest a bit of a defensive tone. EUR and GBP may become more active as the week progresses with the Bank of England and ECB holding their monthly meetings on Thursday. The loonie continues to weaken. Finance minister Flaherty indicated that a weaker CAD could help to increase the government’s 2015 surplus and enable it to deliver on a key past election promise. With an election looming for 2015, this sounds like the government would be happy to see a lower loonie and likely won’t step in to support the currency. Economic News Service PMI reports include: UK 58.8 vs street 60.0 Germany 53.5 vs street 54.0 France 47.8 vs street 47.4 Italy 47.9 vs street 48.7 Spain 54.2 vs previous 51.5 China HSBC 50.9 vs previous 52.5 Australia 46.1 vs previous 48.9 Significant economic announcements released yesterday afternoon and overnight include: Canada raw material prices Canada Industrial prices Economic reports due later today include: 10:00 am EST US ISM non manufacturing PMI street 54.6 vs previous 53.9 10:00 am EST US factory orders street 1.8% 5:30 pm EST Fed Chair nomination vote

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