Loonie is Relatively Flat
Thursday 5 July, 2018
Daily Currency UpdateThe Loonie is relatively flat today as it trades in a narrow range. Firming expectations for the BoC to raise target rate continues to support the CAD. Oil prices are also stabilizing which is adding to the positive sentiment for the commodity currency. However the US/China tariffs which starts tomorrow leaves the CAD vulnerable to shifts in broader market sentiments.
Key MoversThe USD remains soft today as the market stays sideline going into the imposition of tariffs between US and China tomorrow. ADP Non-Farm Employment and ISM Non-Manufacturing PMI figures both missed target which adds downside pressure on the USD this morning. We’ll see FOMC meeting minutes this afternoon at 2:00 pm EST.
The common currency ended the session flat versus the USD around 1.1657 after trading to a low of 1.1630 and then recovering on news that some ECB members were said to be not so comfortable with the market pricing their first hike as far as December 19. Bets for a September rate hike increased on the news, pushing the Euro up from the session lows.
Focus will now turn into the US as minutes from the last FOMC meeting and employment numbers get released while tariffs on $34bn of Chinese goods come into effect on Friday.
Mark Carney spoke early this morning and communicated a slightly hawkish tone when he said that he felt “greater confidence” that the UK economy is performing better after Q1. The market is pricing in an 80% chance of a rate hike in August, which his lifting the GBP.
Although risk appetite continues to hurt the local currency, resilience in commodity prices have been largely AUD supportive and have served to limit downside moves in the short term.
On the technical front, new resistance can be found at the 0.74 level with any downside moves expected to meet supports at 0.7310 and 0.7246 respectively.
The New Zealand dollar edged marginally higher through trade overnight and Wednesday. It’s tracked other commodity currencies higher and has benefited from the improving risk landscape. There was no local data released overnight and there’s none due this evening, either.
Independence Day celebrations ensured volumes remained thin while Fridays Washington deadline to impose tariffs on China stifled risk driven moves and saw investors sidelined frightful of extending moves ahead of this key risk event. With appetite for risk subdued the Kiwi struggled to find any real momentum and it is unlikely upside gains will be sustained while the threat of ongoing trade hostilities remains front and centre.
- USD/CAD: 1.3116 - 1.3160 ▲
- CAD/EUR: 0.6501 - 0.6530 ▼
- CAD/GBP: 0.5733 - 0.5765 ▲
- CAD/AUD: 1.0288 - 1.0325 ▼
- CAD/NZD: 1.1013 - 1.1136 ▼