Yesterday, USDCAD climbed from 1.3250 up to 1.3272 – a 5 week high and fifth consecutive day of gains (albeit marginal – net gains on the week have been less than 35 basis points). The pairing then fell back to hold near 1.3242/55 for the balance of the day. Overnight, risk trades received a boost from positive trade comments from U.S. White House economic advisor Kudlow. The AUD, NZD, and CAD moved higher while the USD and JPY moved lower during the Asian session. CAD flows reversed during the London session taking USDCAD from 1.3219 back up to 1.3252. U.S. data this morning was a bit weaker than expected and USDCAD has pushed lower once again to 1.3217/22.
U.S. stocks fluctuated and bonds advanced as the risk rally that took equities to all-time highs stalled amid mixed economic data and mounting concern over a partial trade deal. The S&P 500 edged away from records reached over the last week sparked by hopes that the U.S. and China would soon hammer out an agreement. That hasn't happened, and there's been an abundance of signs that negotiations are stumbling. Adding to that, weak economic numbers out of China reinforced concerns that the trade war is weighing on the global economy.
Yesterday, USDCAD climbed to 1.3258 – a 4 week high before falling back to 1.3216. The pairing then moved back to hold near 1.3230/40 for the balance of the day. Overnight, risk aversion was elevated benefitting the USD and JPY and taking USDCAD up to 1.3268. The NZD is the best performing currency on the day after the New Zealand central bank surprisingly held its key interest rate at 1%. Risk flows have reversed course this morning while U.S. Fed Chairman Powell confirmed a likely pause in interest rate cuts as long as the economy remains on track. The OPEC Secretary offered up bullish commentary on oil suggesting a steep supply in U.S. shale output along with an upside swing in oil demand for 2020. Oil prices are back up near 6 week highs after the comments while USDCAD has fallen back towards session lows.
U.S. stocks rose as investors awaited clarity on the likelihood of a partial trade deal between America and China. The dollar and Treasuries advanced. The S&P 500 reached a record ahead of a talk by President Donald Trump at the Economic Club of New York at noon that could veer into comments on trade. Tech led the advance. Drugmaker AbbVie Inc. rose amid what may be the largest bond sale of the year to fund its Allergan Plc acquisition, while Walt Disney Co. gained as its much-anticipated streaming service debuted.
Yesterday, USDCAD dropped from 1.3198 down to 1.3160 before climbing to hold near 1.3175 for the balance of the day. The USD has seen broad gains starting during yesterday's North American session. The USD index (DXY) has climbed from near 3 month lows at the beginning if the week towards a 3 week high. U.S. 10 year yields have surged to 1.93% - a 3 month high. The 10 year was as low as 1.45% in September during the low point of the U.S. / China trade war. Optimism over phase one of a trade deal has helped propel equity markets to historical highs. Markets are down slightly today as Trump has reportedly not yet decided if he will roll back tariffs (there were reports that tariffs would be rolled back by both sides yesterday). Canada's job numbers missed estimates this morning sending USDCAD from 1.3200 up to 1.3237 – near a 4 week high. The pairing has since fallen back towards 1.3210.
U.S equities climbed early after China said it agreed with America to roll back tariffs on each other's goods in phases as they work toward a trade deal. Treasuries and gold declined. The S&P 500 Index rose at the open Thursday after a Chinese government spokesman said the economic superpowers would remove the duties in phases "as progress is made on the agreement." China is also reportedly studying the removal of curbs on U.S. poultry imports. Shares advanced in Hong Kong and China's yuan strengthened offshore. Equities trading in Shanghai and Tokyo had already closed. The Stoxx Europe 600 advanced.
Yesterday, USDCAD dropped from 1.3163 down to 1.3115 – a 1 week low and break of the 1.3130 support level. The move lower was short-lived as a better U.S. ISM data saw the USD broadly gain during the North American session. USDCAD climbed to 1.3180 before falling back to 1.3143. There has been little change overnight with most currencies in a holding pattern as the market awaits further developments on the U.S. / China trade front. China has reportedly asked that the September tariffs be rolled back. USDCAD climbed from session lows near 1.3153 up to 1.3184 this morning after weaker than expected Canadian Ivey PMI data. The pairing has since moved back towards 1.3167 despite a 2% decline in oil prices after EIA inventory data indicated a much larger than expected build in crude oil stocks.
U.S. equities were mixed Tuesday as investors digested the latest earnings reports and awaited more news about trade talks between America and China. Treasuries fell, while the yuan strengthened past 7 for the first time since August. The S&P 500 was little changed after a record-setting Monday, as declines in real estate and consumer staples offset advances in financial stocks. The Stoxx Europe 600 Index nudged higher, and oil rose for a third day, while gold slipped below $1,500.
On Friday, USDCAD dropped from 1.3170 down to 1.3140 before climbing to 1.3196 after the U.S. jobs report. The move higher was short-lived as broad-based USD weakness saw USDCAD close the week near session lows (1.3133/38). Global equity markets are on the rise today as European manufacturing data beat market estimates. Also, oil prices are up more than 2% on reports of deeper production cuts as OPEC meets on Dec 5-6. USDCAD has held a fairly narrow range with a brief move to 1.3160 followed by a decline to 1.3137 this morning.
Yesterday, USDCAD dropped from 1.3170 down to 1.3135 before climbing back to hold a 1.3160 – 1.3173 range for the balance of the day. The USD briefly gained this morning after headline jobs data beat expectations along with a +95,000 revision to the previous two months. USDCAD climbed from 1.3160 up to 1.3196 – just shy of Wednesday's two week high of 1.3203/08. The move higher was short-lived with the USD broadly falling as wage inflation was a touch soft and ISM manufacturing data was weaker than expected. The USD index has fallen to 15 week lows while USDCAD is back down near session lows @ 1.3150.
Stocks opened lower as concerns continues to swirl about the prospects for a long term trade deal between the U.S. and China. Many experts now think China will play the long game and placate the Trump administration in the short term while hoping for a more manageable president after next years election. A position that if it backfires could have dire trade consequences.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.caThe CAD was the top performing currency this week although trading ranges were fairly narrow in comparison to recent weeks. The Federal Election result was a non-factor for the CAD as was a poor retail sales report. The Bank of Canada Business Outlook Survey was good while overall market sentiment remained upbeat with North American equity markets gaining on the week and nearing recent historical highs. USDCAD opened the week near 1.3138 and fell to 1.3080 despite a 2.5% drop in oil prices. The move lower in oil prices was short-lived with OPEC reporting the possibility of deeper production cuts due to weak demand growth in 2020. EIA also reported a surprise draw from inventories sending oil up 7% from the lows to trade near a 5 week high. USDCAD eased lower over the course of the week with a series of lower lows and lower hjghs. The pairing stalled / closed the week near the 1.3050 level – within a half cent of the 2019 July low of 1.3016. The EUR gave back last week's gains falling back below the 1.45 level and nearing 3 year lows. The GBP also gave up a portion of last week's gains as the Brexit saga continued. The probability of a "no deal Brexit" can safely be ruled out however the UK is still seeking an extension to the negotiations while PM Johnson called a Federal election for Dec. 12. The JPY declined towards 6 month lows on U.S. / China trade progress and overall positive market risk sentiment. The market now turns its focus to the October 30th Bank of Canada and U.S. Fed interest rate decisions. The BOC is expected to hold at 1.75% while the Fed is expected to lower its rate from 2.00% down to 1.75%. The market probability of a Fed cut is 93.5% compared to just 53% one month ago.
U.S. stocks fluctuated after closing at a record as investors digest a spate of earnings reports ahead of tomorrows expected rate cut by the Federal Reserve. With the Bank of Canada weighing in as well with their announcement all eyes are on the two central banks upcoming releases Wednesday.
After closing the third straight week in the negative territory last Friday, the USD/CAD pair gained traction and rose close to 1.3080 during the European trading hours on Monday but struggled to push higher as this move is seen as a technical correction of last week's drop rather than a fundamentally-drive advance. Last week, hopes of the OPEC opting out for deeper production cuts amid dismal global energy demand outlook and a sharp drop in crude oil stocks in the U.S. provided a boost to crude oil prices and helped the commodity-related CAD outperform its rivals. The barrel of West Texas Intermediate (WTI) added 5.5% last week and is now staying in a consolidation phase above the $56 handle. Meanwhile, ahead of this week's critical FOMC meeting, the US Dollar Index is staying in a tight range. The Greenback came under some renewed selling pressure at the beginning of the week in response to a pick up in the sentiment surrounding the riskier assets on auspicious Brexit headlines, lifting GBP, EUR and US yields.
Stocks struggled for direction on Thursday despite strong earnings from Microsoft and Tesla.
The S&P 500 hovered along the flatline while the Dow Jones Industrial Average slipped 0.3%, or 73 points. The Nasdaq Composite climbed 0.3%. Microsoft reported earnings per share of $1.38 on revenue of $33.06 billion for the previous quarter. Analysts polled by Refinitiv expected a profit of $1.25 per share on revenue of $32.23 billion. Microsoft's strong quarterly performance was driven in part by Azure, its cloud business, which saw revenues grow by 59% on a year-over-year basis. The stock rose 1.4%.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca
The CAD was mixed these past two weeks with gains against the USD and JPY and losses against the EUR and GBP. USDCAD spent much of the previous week (Oct 7 – Oct 10) trading within a narrow 1.3290 – 1.3325 range. The USD and JPY were broadly stronger as trade tensions between the U.S. and China remained elevated. There were talks from the U.S. side on restricting capital flows into China while China's trade delegation to Washington was reportedly cutting its visit short. There were also reports that a Brexit deal was unlikely to be put together before the Oct. 31 deadline. The trend began to shift during Thursday, Oct. 10th. U.S. CPI was weaker than expected while positive Brexit related meetings saw the GBP gain momentum and surge towards 4 month highs. On Friday the 11th, Canadian jobs data beat expectations sending USDCAD down to 1.3170 – near 10 week lows. Canada added 70,000 full time jobs while the unemployment rate declined to 5.5% - a 50 year low. Also, USD and JPY declined further on positive developments with U.S. / China trade talks. USDCAD largely ranged between 1.3195 and 1.3240 between Oct. 14th – 16th before falling to 1.3130 on the 17th. Canada's manufacturing data was better than expected while ADP employment data included a substantial positive revision to August data – 109,000 jobs added from 49,000. U.S. retail sales and industrial production data were weak and the broad USD index DXY declined to a 3 month low. The market probability of another U.S. Fed interest rate cut at the upcoming Oct. 30th meeting has climbed from 44.9% up to 92.5% over the past month. USDCAD edged lower towards 1.3120 on Friday while the GBP uptrend continued on market confidence of a Brexit deal. Over the past two weeks, GBPCAD surged 9 cents while GBPUSD climbed 8 cents. The JPY along with the USD dropped to 3 month lows against the CAD on positive market sentiment that saw the DJIA gain 1,400 pts or 5% from its October lows.
U.S. stocks rose as investors sifted through a batch of earnings reports. Treasuries and the dollar advanced. Oil rebounded. The S&P 500 Index traded near the 3,000 level. Boeing Co. led gains in the Dow Jones Industrial Average after mapping out a sharp boost to output of the 737 Max. The momentum in earnings has slowed pretty sharply, so there's not a lot of expectations for earnings growth and there is clearly more evidence of concern about slowing outside the U.S. Elsewhere, oil climbed after a U.S. government report showed a surprise drop in crude supplies. The pound rose as the European Union considered granting another delay to the Oct.31 Brexit deadline.
Tepid trading to start the day as China / U.S. trade issues continue to headline the news. Disappointing Canadian retail sales data hurt the Canadian dollar in trading so far this morning. The Canadian election resulted in a Liberal minority government of some form, with a definite leftward bias.
U.S. stocks rose amid positive signs on U.S.-China trade talks and as investors awaited earnings from some of the world's biggest companies. Treasuries fell. The S&P 500 Index climbed toward a one-month high, trading near the 3,000 level, led by financial and energy shares. The pound fluctuated on news that the U.K. Parliament won't vote on Prime Minister Boris Johnson's Brexit deal Monday. Investors continue to monitor fresh developments on trade negotiations between the world's 2 largest economies. Larry Kudlow, President Trump's economic advisor, told Fox Business that he sees the possibility of taking off the December tariff increases if talks go well. China's Vice Premier Liu He said Saturday that there had been substantial progress with the U.S. to lay the foundation for an initial accord on trade. Currently, the TSX is up 0.32% and the DJIA is up 0.01%. EURCAD is down 0.44% trading between 1.4607 and 1.4665. GBPCAD is down 0.05% trading between 1.6907 and 1.7064. JPYCAD is down 0.31% trading between 0.01206 and 0.01211. Gold is up 0.13% trading between $1,487 and $1,495USD/oz while silver is up 1.28% trading between $17.50 and $17.87. Oil (WTI crude) is down 1.33% trading between $52.80 and $54.00.
Yesterday, USDCAD dropped from 1.3212 down to 1.3130 (the lowest since late July) with bounces limited to 1.3148. The USD was broadly lower with the USD index falling towards a 2 month low. Canada's manufacturing data was stronger than expected while the ADP employment report included a large revision for August - from 49,000 up to 109,000 jobs. U.S. industrial production declined more than expected. Market expectations for a U.S. Fed rate cut on Oct. 30th have surged from 67% up to 87% over the past week. Currencies have held fairly narrow ranges today with USDCAD confined to a 1.3131 – 1.3145 range. The major event is tomorrow's UK Parliament Brexit vote. The GBP has been soaring this week as PM Johnson has negotiated a deal with the EU. To pass, 320 votes are needed and reports indicate that without support from the DUP, it is expected to be a very close call. Former PM May's deal was rejected back in March with a vote of 286 for and 344 against. Another key event is the upcoming Federal Election on Monday – although the CAD has been unusually stable today.