The Loonie was hit from a number of fronts in overnight trading, recording a decline of 50 pips on a daily basis. Opening this morning at 0.7736 against its US counterpart, the Canadian Dollar felt the effects of a strengthening Greenback, softening oil prices and poorer PMI figures.
Kicking things off on the domestic front, Canada released the Richard Ivey School of Business’ PMI survey which showed a steep, negative discrepancy against the expected result. A leading indicator of economic health, the PMI figure came in as barely expansionary at 50.4 against an expected 62.3.
The CAD was also unsupported in the commodity markets with a sharp fall witnessed in crude oil prices. West Texas Intermediate had rallied to highest level in nearly four years yesterday, touching $76.9/Barrell to ultimately reverse course and fall $2 on the day.
South of the border, the Federal Reserve added fuel to the fire with a decidedly hawkish comment from the Fed Chair Powell. Noting that rates were still “accommodative”, Powell added that there was really no reason to think that the current expansionary cycle could not continue effectively indefinitely, a thought not shared by the market. The market did react to the hawkish comments however and the USD rose accordingly as the likelihood of further rate hikes in the near future become more probable.
Moving into Friday, Canada looks to employment rate readings at home and in the US for direction.