CAD - Canadian Dollar
The Loonie is trading flat this morning ahead of Markit Canada Manufacturing PMI data (at 9:30 am EST), which showed a contraction last month, decreasing from 51.4 to 50.4. A further reduction might negatively impact the Loonie, but an increase would make the USD/CAD pair fall towards the mid 1.3220's. At this moment, it is trading at 1.3235 and it reached a first resistance level at 1.3240 followed by a high of 1.3256 today. If the mood in the capital markets improves, it might even test 1.3215 on the downside.
This Friday, February 7th, employment numbers will be released, which will provide some clues about the next BoC move. However, for now, the Loonie might continue to follow most G10 peers’ price action and the market’s mood, which was mostly in a “risk-off” environment last week, which may negatively affect the Loonie. Furthermore, the Loonie will continue following crude oil price action, which has fallen over the last few days and it has been one of the factors contributing to the weakening of the Loonie in January. The export of black gold plays a key role in the Canadian economy. The Loonie might be impacted again this week when the OPEC and non-OPEC's Joint Technical Committee meet on February 4-5th to discuss the potential impact of the Coronavirus outbreak on the oil market. This meeting will likely discuss the alternative of prolonging or increasing a cut on oil output.
The Euro is moderately falling this morning, driven by the Pound’s weakness. Despite ECB Vice President Luis de Guindos saying in Athens that risks for the Euro-area economy are, “...less tilted to the downside,” than they were only three-four months ago. Euro-area manufacturing released encouraging manufacturing data this morning, showing signs of recovery after unexpected economic contractions in France and Italy damped growth in the fourth quarter. Chris Williamson, an economist at IHS Markit said, “Green shoots of recovery are in sight...the improvement adds to our view that the euro-zone economy could see growth strengthen in the coming months”. The Markit Eurozone Manufacturing PMI (purchasing managers’ index) came in at 47.9 versus the expected number of 49.8.
The British Pound is falling 1.1 percent at this moment after Prime minister Boris Johnson showed a hard-line approach again to Brexit negotiations with Brussels. He will lay out his vision on Monday for a “Canada-style” free-trade deal, vowing to ensure that the UK will not be bound by any EU rules on social protections and the environment. Technically speaking, the GBP/USD has an important resistance at 1.3215, which was also the high during Friday's session.
China cut some borrowing costs and injected cash into the financial system to ensure ample liquidity as the their equity market fell strongly last night in their first session after the longer than expected break due to their Chinese New Year holidays and the outbreak of the Coronavirus. The Chinese central bank set its daily Yuan reference rate stronger than the key 7-per-dollar level as onshore markets resumed trading for the first time since Jan. 23rd.
1.3222 - 1.3265 ▼EUR/CAD:
1.4614 - 1.4700 ▲GBP/CAD:
1.7225 - 1.7350 ▼AUD/CAD:
0.8450 - 0.8893 ▲NZD/CAD:
0.8549 - 0.8579 ▲