Daily Currency Update

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Auto parts drive factory sales up

CAD - Canadian Dollar

Canadian manufacturing sales increased 7% for the third consecutive month in July, according to StatCan. Sales of motor vehicles and parts drove the increase from the prior month.

Also called Factory Sales, it’s a leading indicator of economic health. Sales are 5.4% below February’s pre-pandemic levels.

Motor parts rose 38% from the prior month. Higher exports of motor vehicles and parts to the United States contributed to the trade gains observed for July.

But exports of one of Canada’s most famous commodities were hit by the Chinese government. In June, China enacted new testing measures for live and processed lobster imports before they can enter the country. The new measures disrupted lobster sales in July.

Key Movers

Eurozone factories performed better than most expected in July. Industrial output was 4.1% and the economic recovery continued throughout Europe. There are a couple of concerns. Industrial production in June was 9.5%, and the July output implied there was slow down. With increased cases of COVID-19 across Europe, and new lock down measures being put in place, the Eurozone is at a crossroad.

Last night, despite mounting pressure from the European Union, Parliament backed Prime Minister Boris Johnson’s internal market bill. MP's defended the bill and said that it has necessary safeguards to protect Northern Ireland and the rest of the United Kingdom in-case Brexit negotiations break down further. Johnson has suggested that the European Union are using the withdrawal treaty agreed in January to potentially implement trade barriers between Northern Ireland and mainland Britain. It is clear to see the fractious relationship between the United Kingdom and the European Union is strained.

The Australian dollar is slightly stronger this morning when valued against the greenback, just falling short of the 0.7300 level, despite the rise in Gold prices. Higher risk appetite has lent some support to the Kiwi dollar yesterday which saw selling pressure on the Aussie. While the Kiwi is up 0.6% to over 0.6700, the AUD is barely higher to start the week, seeing NZD/AUD up 0.5% to about 0.9200.

Expected Ranges

EUR/CAD: 1.559 - 1.564 ▲

GBP/CAD: 1.688 - 1.699 ▼

AUD/CAD: 0.958 - 0.965 ▲

USD/CAD: 1.313 - 1.318 ▼