CAD - Canadian Dollar
Last night from San Francisco, Bank of Canada Governor Stephen Poloz said that productivity gains from technological change, like the digitalization of the global economy, may be offset by the trade war and de-globalization. He mentioned, "…while inflation remains subdued, we should allow growth to run, for this is a good way of providing upside potential to those negatively affected by the new technology." He meant that technological change has the potential to boost capacity, and it should be supported by monetary policy.
Unfortunately for market participants, he did not provide any hint on how those factors will affect the current debate at the Bank of Canada. Are they going to cut or hike rates? As a consequence, the USD/CAD pair is still trading at 1.3240 this morning, and it has not had any significant change from last Wednesday.
An adverse driver for the Loonie is an increase of U.S. crude inventories to 2.22 million barrels last week as production rose to a record according to EIA data. At the same time, OPEC warned that markets remain on course for a surplus in early 2020. Crude oil is falling 0.20 in the market at this moment.
The likelihood of the U.S. and China reaching a phase-one trade deal got a bit dicier than last week. There are some signs of complicating trade talks; for instance, the Senate is preparing for the accelerated passage of a law to support pro-democracy protesters in Hong Kong by placing the city's special trading status under annual review. Of course, Beijing disagrees with the U.S. intervention. But at the same time, last night, White House economic advisor Larry Kudlow said that phase-one trade talks between the U.S. and China are in final stages with both sides, "…in close contact." Nobody knows what will be the outcome, but we are probably going to have first-hand information if we follow some Twitter accounts.
RBNZ's Orr said on Bloomberg TV that the door is open for a rate cut if needed, but that the central bank is in a position to observe data, and there are some signs of a pick-up in activity. The Kiwi dollar is bouncing against the Canadian and the U.S. dollar, 0.19 and 0.27 percent, respectively, at the time of this writing.
In Australia, despite the last miss in employment numbers, Australia's economy appears to show little direct effects from the U.S. China trade and technology dispute. The country's trade surplus is at a record high, and export volumes to China are at record highs. The AUD/USD pair trades 0.29 percent higher at 0.6806 this morning.
1.3220 - 1.3265 ▼EUR/CAD:
1.4597 - 1.4623 ▲GBP/CAD:
1.7052 - 1.7190 ▲AUD/CAD:
0.8969 - 0.9015 ▲NZD/CAD:
0.8420 - 0.8497 ▲