Loonie ending the week higher overall
Friday 14 September, 2018
Daily Currency UpdateThe Loonie is having a tough time breaking through the 0.77 resistance level against the greenback with the lack of development in the ongoing NAFTA negotiations. Besides NAFTA news, market participants may have found PwC’s Wednesday report insightful, which showed that US tax reforms could put 635,000 Canadian jobs at risk which equate to $85 billion of Canadian GDP. Oil prices are also putting pressure on the CAD today, as the IEA reported global oil supplies hitting a record 100million bpd for the month of August. Despite the lower CAD today, it seems to remain higher overall this week.
Key MoversThe Greenback has been under pressure this week against its G10 peers with PPI and CPI both missing the mark. The weak prints continue this morning as we have core retail sales releasing worse than expected at 0.3% when forecast was for 0.5%. The only positive side on the economic calendar is from UoM Consumer Sentiment which printed better than expected at 100.8 versus forecast of 96.7. The US Dollar Index has found support levels at 94.50.
The EUR is getting some support today after a more hawkish tone from the ECB President Draghi’s press conference yesterday. President Draghi stated that he is confident that core inflation will rise higher. Data from the Eurozone today was also supportive with a pick-up in wage growth as labour cost raised at the fastest pace since 2012.
Bank of England Governor Carney continues to warn that a weaker pound and higher inflation would mean higher interest rates, if a no-deal Brexit occurs according to Scotiabank. The good news is that it seems like a deal may come through in the next couple of weeks. Today Carney spoke in Dublin and shared his view on job risk due to technological changes. He believes that the estimate of job losses are too extreme.
The Aussie found its feet on Thursday following a positive jobs report. The highlight of the report was the Australian economy adding 44,000 jobs against an expected 18,000. The Australian dollar jumped significantly on the news to test the key 0.72 level but failed to break through.
The shift in sentiment was also assisted by off-shore forces, as the USD weakened following a poor CPI result.
The NZD opens higher against the USD as weaker than expected inflation numbers from the World’s largest economy forced the USD lower. The NZD/USD pair did rise as high as 0.6590 after the release, however further twitter commentary from President Trump regarding the Chinese trade situation hurt both the AUD and NZD units.
- USD/CAD: 1.2983 - 1.3043 ▲
- CAD/EUR: 0.6568 - 0.6588 ▼
- CAD/GBP: 0.5852 - 0.5875 ▼
- CAD/AUD: 1.0669 - 1.0718 ▼
- CAD/NZD: 1.1667 - 1.1723 ▼