U.S. stocks rose above their record high at the start of a week packed with data that will provide clues on global economic growth. Treasury yields and the dollar climbed, while oil fell. Financial and industrial companies led gains in the S&P 500 Index. The Stoxx Europe 600 Index fluctuated as data showed euro-area economic confidence at a two-year low. Crude extended losses after U.S. President Donald Trump renewed his push for lower prices and Russia said it would soon resolve a problem with contaminated supplies. Policy makers are expected to hold rates steady on Wednesday, though new growth and prices data may affect their characterization of the economy. The next round of China-U.S. trade talks will get under way this week with significant issues still unresolved but with enforcement mechanisms "close to done," U.S. Treasury Secretary Steven Mnuchin said. Elsewhere, Spain's benchmark stock index underperformed as Socialist Pedro Sanchez looked set to return as the country's prime minister after snap elections. Markets in Japan remained shut for holidays, with many others set to follow suit on May 1.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.caThe CAD was mixed this week gaining ground against the EUR and AUD while losing ground to the USD and JPY. USDCAD initially dropped from 1.3380 down to 1.3336 on Monday after oil prices surged 4% to a 6 month high after the U.S. reported that it will no longer waive sanctions on imports of Iranian oil starting May 2nd. The pairing climbed above 1.3440 on Wednesday ahead of the Bank of Canada interest rate announcement. The bank held its key rate at 1.75% and concluded that "an accommodative policy interest rate continues to be warranted." In March, the statement read "the outlook continues to warrant a policy interest rate that is below its neutral range." This is a shift to neutral from the hawkish bias noted in January: The BOC "continues to judge that the policy interest rate will need to rise over time into a neutral range to achieve the inflation target. The appropriate pace of rate increases will depend on how the outlook evolves, with a particular focus on developments in oil markets, the Canadian housing market, and global trade policy." USDCAD climbed to 1.3522 after the BOC statement before falling back to 1.3457 during the press conference as governor Poloz indicated he felt the Q1 slow-down was temporary and that the economy was primed for a rebound. USDCAD tested 1.3517 on Thursday driven by broad-based USD strength that saw the USD index test a 2 year high. Again, trade above 1.3500 was limited to a just a few minutes and the rate eased lower towards 1.3475. U.S. headline Q1 GDP beat estimates Friday morning driving USDCAD up to 1.3495 before broad USD weakness took the pairing down to 1.3452. Some components responsible for the strong GDP reading were deemed to be temporary bringing concerns that Q2 GDP would be softer. GDP inflation data was exceptionally low prompting U.S. 10 year treasury yields to fall below 2.50% towards 16 month lows. USDCAD finishes the week at 1.3450 (Friday's low) effectively erasing Wednesday's post Bank of Canada gains. The pairing also closes the week below the 1.3465/70 level – the technical level that had contained USDCAD rallies over the past two months and subsequently broken during Wednesday's move to 1.3522.
Yesterday, USDCAD climbed from 1.3482 up to 1.3517 – just shy of Wednesday's 1.3522 high, before falling back to 1.3475. Overnight, USDCAD moved back up to 1.3498 but has fallen to 1.3451 this morning despite oil prices down 4.3% on the day. Oil was 6% higher up at $66.40 – near 6 month highs just two days ago. The USD is broadly weaker this morning after the USD index touched a 2 year high yesterday. Although U.S. Q1 GDP was much higher than expected, Q4 data was revised lower and some components of the reading were temporary that will likely lead to a softer Q2 reading. The GDP price index (inflation) was much weaker than expected despite the surge in commodity prices during Q1. U.S. 10 year yields have slipped below 2.50% - near 16 month lows. USDCAD has since corrected up to 1.3474 before testing session lows again.
U.S. Durable Orders Rose 2.7% in March, Faster Than Expected but this news was off set by the highest number of jobless claims since 2017. After yesterdays Bank of Canada's dovish statement release hammered the Canadian dollar we have seen mostly consolidation in the FX markets so far this morning. Currently, the TSX and the DJIA are down by about 0.50%. EURCAD is down 0.01% trading between 1.5009 and 1.5060. GBPCAD is down 0.04% trading between 1.7370 and 1.7426. JPYCAD is up 0.55% trading between 0.01202 and 0.01209 . Gold is up 0.33% trading between $1,273 and $1,282USD/oz, silver is up 0.37% trading between $14.86 and $15.01USD/oz, while oil (WTI crude) is up 0.10% trading between $65.55 and $66.28.
The Bank of Canada fully abandoned its bias toward raising interest rates as the economy grapples with a slowdown, bringing its policy in line with the Federal Reserve and other major industrial central banks. Policy makers in Ottawa left their benchmark overnight rate unchanged at 1.75% for a fourth straight decision Wednesday, and dropped a reference to future increases that had been in every rate statement since the end of 2017. The bank cited a series of factors, from slower global growth to sluggish housing and oil sectors, that brought Canada's economy to a near halt over the past six months. Officials also laid out a more dour growth forecast for this year than economists are expecting. "Governing Council judges that an accommodative policy interest rate continues to be warranted," officials led by Governor Stephen Poloz said in the statement. "We will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive." While Poloz had been reluctant to fully discard the idea that his next step is likely higher, making him a bit of an outlier, Wednesday's changes indicate policy makers may now see the odds of the Bank of Canada's next move as equally weighted between a hike and a cut, depending on how the economy unfolds. After the announcement, the CAD weakened to 1.3521, the lowest level since Jan.03.
U.S. equities climbed on the back of better-than-forecast earnings, while the dollar strengthened and Treasury yields dipped.The S&P 500 Index, trading near the highest valuation since September, extended its advance as Twitter, Coca-Cola and Hasbro climbed following favorable first-quarter reports. Banks were the worst performers in the Stoxx Europe 600 Index, which held steady as many markets reopened following the long Easter weekend. The pound weakened as U.K. Prime Minister Theresa May confronted further challenges to her leadership.
On Friday, USDCAD was rather uneventful trading in a 1.3365 - 1.3396 range as most markets were sidelined for the holidays. The CAD is the best performing currency today sparked by news that the U.S. will no longer waive sanctions on imports of Iranian oil beginning May 2nd. Oil prices (WTI crude) jumped $2 to the highest level in nearly 6 months. USDCAD has fallen from 1.3389 down to 1.3354 accordingly. USDCAD has shown little direction over the past several weeks trading back and forth between 1.3300 and 1.3400. There have been some minor breaches of this range with limited follow-through and rather quick moves back the other way. The Bank of Canada interest rate announcement could be the event that breaks the trend this Wednesday. Inflation has been running hotter than expected the past two months while there have been positive surprises with regards to several economic data - retail sales, GDP, employment, and a narrower trade deficit.
Garo Mavyan | Retail FX & Precious Metals TraderMuch to the dismay of motorists around the world, oil prices have seen a seemingly unstoppable upward spike since the beginning of the year. The reasons are various: in the United States, several critical refineries have been closed either for repair or maintenance. Growing instability in key oil exporting countries such as Iran, Libya and Venezuela have limited the market's supply. OPEC, which controls nearly half of the world's oil production, has announced its members intend to cut quotas. Due to these developments, oil prices have climbed nearly 40% so far this year. Gas prices across Canada have risen accordingly, and British Columbians are paying some of the highest record-breaking prices in Metro Vancouver. Though some Canadian provinces have already introduced it, the recent implementation of a federal carbon tax in more provinces is cranking up the pressure. Still, the current sting that Canadians are feeling in their wallets is an important reminder of the need to balance supply and demand.
U.S. retail sales jumped by the most since September 2017 as gains in motor vehicles and gasoline stations boosted sales, signaling consumers are giving the economy greater support. The value of overall sales in March rose 1.6 percent after an unrevised 0.2 percent decrease the prior month, according to Commerce Department figures released Thursday. That exceeded all forecasts in Bloomberg's survey calling for a 1 percent gain. A separate report Thursday from the Labor Department showed filings for unemployment benefits fell last week to a fresh a 49-year low.
U.S. stocks were mixed as health-care providers tumbled on concern about policy changes, while the latest batch of corporate earnings did little to boost confidence in the economy. The S&P 500 Index slipped back toward 2,900 while The Nasdaq 100 Index touched an all-time high. Data overnight showing China's economic growth, industrial production and retail sales all topped estimates boosted equities around the world. The Stoxx Europe 600 Index erased a drop, while shares rose in Japan and Shanghai. The yield on 10-year Treasuries turned lower after climbing to a 4-week high and the dollar fell amid data showing the U.S. trade gap unexpectedly narrowed. European debt also dropped, while the euro strengthened even as Germany's economy ministry revised its growth forecast lower. As earnings continue to pour in, investors are growing more confident the anticipated drop in first-quarter results won't spoil the year. At the same time, central banks around the world remain accommodative, and the latest Chinese data appears to have calmed jitters that the world's second-largest economy was headed for a slowdown. Elsewhere, oil climbed after data showed a surprise drop in crude inventories. The New Zealand dollar retreated after inflation slowed more than forecast, while the Australian dollar rose after the Chinese data.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca
The CAD gained against the USD, JPY, and GBP this week while losing a bit of ground to the EUR and AUD. For the second week in a row, the major currencies were confined to a narrow range for most of the week before extending gains against the USD and JPY on Friday which saw the USD index fall to a 3 week low. USDCAD moved lower early in the week from 1.3390 down to 1.3284 (near a 6 week low) on the back of higher oil prices (WTI crude touched a new 5 month high @ $64.70). The move lower came despite softer equity markets on concerns the U.S. would impose tariffs on the European Union. In addition, the IMF revised its global growth forecast from 3.5% down to 3.3% - the 3rd negative revision over the past 6 months. The move below 1.3300 did not sustain and the pairing moved back up to 1.3360 ahead of Wednesday's U.S. CPI inflation data. The headline beat expectations while the core data was a touch soft. USDCAD dropped back down to 1.3306 as the USD broadly weakened ahead of the U.S. Fed minutes. USD selling ceased after the Fed was not as dovish as the market expected and the USD broadly recovered during Thursday's session taking USDCAD up to a weekly high of 1.3398. Oil prices sold off after failing to break above the $64.70 level for the 3rd time this week. The trend abruptly changed again on Friday as much stronger than expected trade data out of China sent global markets and oil prices higher / the USD and JPY lower. USDCAD dropped from 1.3380 down to 1.3312, although oil prices did fail for a 4th time to break the $64.70 level. The TSX and DJIA both traded near historical highs.
U.S. stocks edged toward all-time highs as investors sifted through a group of high-profile earnings for clues on the strength of the American economy. The 10-year Treasury yield reached its highest level since the March Federal Reserve meeting.Treasuries continued to slump, with rates reclaiming levels last seen before the Fed's dovish tilt a month ago. In Europe, equities climbed for a fifth day, driven by insurance and financial services firms. In Asia, shares in China and Hong Kong outperformed markets in Japan and South Korea. The euro pared a decline after Bloomberg reported that European Central Bank officials are said to lack enthusiasm for any revamp of their negative-interest rate tool.
The S&P 500 Index halted a 3-day advance as Goldman Sachs Group Inc. retreated after missing estimates for sales and trading revenue. Citigroup Inc. was little changed after its revenue matched expectations. The benchmark for American equities is near a 6-month high and less than 1% from its record after a torrid run so far in 2019. The Stoxx Europe 600 Index traded in a tight range Monday, as losses in mining shares offset increases in media and insurance. The euro strengthened for a second day. In Asia, equities approached a fresh six-month high, propelled by markets in Japan and Korea, following the Bank of China's release of upbeat credit data late Friday. With Chinese trade and lending data showing signs of improvement for the world's second-biggest economy, investors are turning to the U.S. earnings season to confirm the resilience of corporate America in the face of numerous challenges to growth. JPMorgan Chase & Co. posted strong first-quarter results last week, and Bank of America Corp. is up on Tuesday. Central banks remain in the picture, with President Donald Trump renewing his attack on the Fed leadership over the weekend, saying the stock market would be "5,000 to 10,000" points higher had it not been for the actions of U.S. policy makers.
Yesterday, USDCAD climbed from 1.3308 up to 1.3396 (testing the weekly high) before falling back to hold a narrow 1.3365 – 1.3385 range for the balance of the session. The USD and JPY have broadly weakened today as global equity markets surge higher on the back of much stronger than expected trade data out of China (Exports: 14.2% exp 7.3% prev -20.8% / Trade surplus: $32.64 billion exp $7.05 billion prev $4.08 billion). The USD index has fallen towards a 2 week low while the JPY is nearing a 4 month low against the CAD. The AUD is the top performer today taking full advantage of the positive market sentiment nearing a 2 month high against the USD. The EUR is the 2nd best performer nearing a 3 week high against the USD after industrial production data was not as bad as initially feared (-0.2% exp -0.6% prev revised from 1.4% up to 1.9%). USDCAD began the day near 1.3380 and has fallen towards range lows near 1.3313. Oil prices have tested the $64.70 level for the 4th time this week and have again backed off sending USDCAD back up towards North American opening levels at 1.3338. The pairing has since eased lower towards 1.3320.
VBCE Daily Foreign Exchange Update for Thursday, April 11 2019
USDCAD spot rate: 1.3375 - 1.3380 (as at 7:18am PST)
Technical Support / Resistance:
Key Economic Data Releases:
-U.S. Initial Jobless Claims 196k (211k Exp.) 204k previous
-U.S. producer price index 0.6% (0.3% exp.) 0.1% previous
Consumer sentiment index
Treasuries ended a two-day rally and the dollar advanced as data confirmed the economy remains on solid footing at the same time inflation is muted. Stocks were mixed ahead of the start of earnings seasons. The 10-year Treasury yield rose toward 2.50 percent after data showed a strong U.S. labor market and tepid price gains, boosting confidence the Federal Reserve can remain in its patient stance toward rates. The pound fell as Prime Minister Theresa May accepted the European Union's offer to push the Brexit deadline out six months. The S&P 500 was little changed as it neared the key level of 2,900 and closed within 1.5 percent of its all-time high.
U.S. stocks edged higher, while Treasuries advanced as investors weighed key developments that continue to raise doubts about the strength of the global economy. The S&P 500 clung to a slight gain as an unexpectedly soft inflation reading potentially boosted the Federal Reserve's new wait-and-see approach to rate hikes. Minutes from the central bank's last policy meeting when it struck a freshly dovish tone are due today at 11am. Banking shares turned lower as heads of major lenders testified before a Congressional committee and the 10-year Treasury yield fell below 2.48%. The dollar gained versus the euro after the European Central Bank reiterated its warnings that global risks continue to batter the region's economy as it signaled no rate hikes for the rest of 2019. The pound advanced as the European Union looked likely to delay Brexit for up to a year at its emergency summit in Brussels. The weaker-than-expected inflation data heighten the attention that will be paid to the Fed's minutes, as investors try to gauge what it will take to budge the central bank out of its steady approach. But sentiment remains fragile after the ECB's and IMF's somber economic reports Tuesday, and amid an escalation of the U.S.-EU trade dispute while negotiations with China remain unsettled. Still, most see the world economy on a path of growth this year.
Stocks fell and Treasuries rose amid renewed concerns about slowing global growth and an escalation of trade tensions. The dollar dropped.The S&P 500 halted an eight-day rally with its steepest drop in two weeks as the Trump administration threatened tariffs on the European Union and the International Monetary Fund cut its global growth outlook to the lowest since the financial crisis. Multinationals bore the brunt of the selling, with Caterpillar and Boeing dragging the Dow Jones Industrial Average lower. Airlines tumbled along with materials and energy producers. Ten-year Treasury yields fell below 2.50 percent, while the greenback declined for a second day against major currencies. The pound was little changed as U.K. Prime Minister Theresa May met with key EU leaders on Brexit. In Asia, most equity gauges advanced.
U.S. stocks halted the longest rally since 2017 as investors awaited signs of progress in the trade war with China ahead of the latest corporate earnings season. Treasuries dropped, while West Texas crude hit a five-month high. The S&P 500 edged toward its first decline in eight sessions, as the post-Christmas rally stalled with the index about 1.5% from reclaiming its all-time high. Energy producers paced gains amid rising oil prices and the USD fell. Following a stellar first quarter across many asset classes, investors are assessing prospects for further gains as the U.S-China seem unable to come to a final decision on trade and earnings season gets underway. Despite a lack of details emerging from last week's discussions, Trump economic adviser Larry Kudlow said the two sides are closer to a deal, and that top-tier officials would be talking this week. A better U.S. jobs report Friday didn't stop President Trump from suggesting the Fed should cut interest rates. Elsewhere, the pound edged higher as British Prime Minister Theresa May appealed to both the public and politicians in search of support for a compromise Brexit plan.
Yesterday, USDCAD held a narrow 1.3343 – 1.3373 range – just below the weekly high and broken support level from last week. The pairing broke above the weekly high to 1.3386 ahead of this morning's release of the Canadian and U.S. jobs report. USDCAD initially dropped to 1.3358 before bouncing to 1.3403. The pairing has since moved back down to 1.3367 and bounced to 1.3385. The jobs data was mixed (U.S. recovered in the headline numbers but wage inflation was weak while Canada saw a minor loss after very strong gains previously while wage inflation climbed). The GBP initially gained on the day on reports that European Council president Tusk was proposing a 12 month Brexit extension. UK PM May later requested a Brexit extension to June 30th. The GBP has subsequently declined and is the worst performing currency on the day.
U.S. stocks pushed higher and the dollar strengthened as investors awaited further news from U.S.-China trade negotiations and key jobs data tomorrow in Washington. Speculation that President Donald Trump is likely to announce plans for a future summit meeting with President Xi Jinping of China to resolve remaining trade issues helped to send prices higher. Trump will meet with Chinese Vice Premier Liu He at the White House on Thursday, as negotiations over a trade deal between the world's biggest economies enter what could be the final stages. The deal being crafted would give Beijing until 2025 to meet commitments on commodity purchases and allow American companies to wholly own enterprises in the Asian nation, according to three people familiar with the talks