CAD falls on soft outlook with trade data, energy inventories and ECB meeting up next
Despite another 1% rally in the price of the crude oil which normally would have been expected to give the loonie a tailwind, CAD was knocked down early and stayed down following the latest Bank of Canada meeting.
Although Canada’s central bank held interest rates steady, it indicated that exports has been surprisingly soft and that July may not have seen as big a rebound as hoped. The Canadian economy is widely expected to bounce back from the wildfire disruptions of Q2 but today’s statement suggested higher risk of a shortfall which could put pressure on the Bank of Canada to cut interest rates at some point down the road.
Although the S&P got to within a few points of an all-time high indices were steady overall through the day. Apple’s announcement of new waterproof iPhone and iWatch products didn’t spark any excitement although the news that a new Super Mario Go app is coming for iPhone this fall sent Nintendo’s shares soaring 28%.
The US Beige Book report and hawkish comments from Richmond Fed President Lockhart, a non-voter this year didn’t move the needle on Fed speculation. Traders used some mixed housing and manufacturing news out of the UK plus testimony from Bank of England Governor Carney trying to justify his actions before and after the Brexit vote as an excuse to take some profits out of GBP following a recent rally.
Today’s Asia Pacific trading may be influenced by trade figures from Australia and China which could indicate resource demand and potentially spill over into trading in commodities like copper and crude oil, and then on to resource currencies like AUD, NZD and CAD.
Late in the day, WTI crude oil popped, propelled by a big 12.0 mmbbl drawdown in API inventories giving the recent advance fundamental support not just deal speculation that could easily fade. Energy commodities may be active through the day today with inventory/storage reports for crude oil, natural gas and gasoline all due later in the morning.
There have been no major corporate announcements after the US close today.
Significant announcements released overnight include:
API US crude oil inventories (12.1 mmbbls)
Canada interest rate 0.50% no change expected
Canada Ivey PMI street 56.5
UK NIESR GDP estimate 0.3% as expected
UK Halifax house prices 6.9% vs street 7.0% vs previous 8.4%
UK industrial production 2.1% vs street 1.9%vs previous 1.6%
UK manufacturing production 0.8% vs street 1.7% vs previous 0.9%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
9:50 am AEST Japan GDP update street 0.0%
11:30 am AEST Australia trade balance street ($2.7B)
TBA China trade balance street $58.8B
TBA China exports street (4.0%)
TBA China imports street (5.4%)
7:00 am BST Germany labour costs previous 3.1%
8:30 am BST Sweden household cons previous 2.9%
12:45 pm BST ECB main refinance rate 0.00% no change expected
12:45 pm BST ECB deposit rate (0.40%) no change expected
12:45 pm BST ECB marginal lending facility 0.25% no change expected
12:45 pm BST ECB asset purchase (QE) target €80.0B
1:30 pm BST ECB Draghi press conference
8:30 am EDT US jobless claims street 265K
8:30 am EDT Canada house prices street 2.5%
10:30 am EDT US natural gas street 42 BCF
11:00 am EDT US DOE crude oil inventories street 0.9 mmbbls vs previous 2.2 mmbbls
11:00 am EDT US DOE gasoline inventories street (0.75 mmbbls)
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