The Loonie decreases following weak manufacturing sales, especially from motor vehicle industries
Tuesday 17 September, 2019
Daily Currency UpdateCAD - Canadian DollarThe Loonie decreases this morning following the release manufacturing sales numbers, which dropped 1.3 percent to $ 57.2 billion in July, following a 1.4 percent decline in June. According to Statistics Canada, sales were down in 11 industries in July, representing 67 percent of total manufacturing sales. The decline in July was mainly due to lower sales in the primary metal and motor vehicle industries. The food industry posted the most significant gain. Technically speaking, the USD/CAD has returned to the rate seen at Friday’s close (1.3285). Furthermore, it is close to the 200 moving average of around 1.3305, which is a strong resistance level. On the other side, key support levels are 1.3251 and 1.3232. For today, we will probably see the USD/CAD rate move between these support and resistance levels because it has been a light morning in terms of economic data, and tomorrow is a Fed release day in the U.S.
Key MoversIn the U.K., the Supreme Court is starting three days of hearings over Prime Minister Boris Johnson's judgment to suspend Parliament. The court is expected to rule on the case within a week. Johnson is still being asked to come up with workable solutions to the Irish border problem. The British pound increases 0.15 percent against the U.S. dollar this morning. The markets continue to trade for a second day in a risk-off mode as the Fed meeting kicks off with a two-day monetary policy meeting. Market participants are expecting a 25 basis point rate cut; however, the possibility of the Fed keeping rates unchanged has risen lately. The focus will be on how strongly the Fed will signal that it is going to cut rates again by the end of 2019. According to the WSJ, Fed Chairman Powell is leading his colleagues to cut interest rates by a quarter percentage point at their meeting tomorrow, for the second time, to buffer the U.S. economy against a slowdown from the U.S.-China trade war and weak growth abroad. However, Powell is in a problematic position tomorrow, because he has to avoid disappointing markets that expect more stimulus and refrain from over-promising, due to the lack of support from other Fed officials. Even worse for Powell is that trade isn't the only geopolitical problem; the risks from the U.K.'s coming departure from the European Union, and an attack on a major Saudi Arabian oil processing hub is disturbing the FX global markets this week.
- USD/CAD: 1.3252 - 1.3315 ▲
- EUR/CAD: 1.4600 - 1.4688 ▲
- GBP/CAD: 1.6522 - 1.6633 ▲
- AUD/CAD: 0.9047 - 0.9107 ▲
- NZD/CAD: 0.8402 - 0.8436 ▲