USDCAD news - page 39
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Bank of Canada maintains overnight rate target at 1/2 per cent
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.
Global growth in the first half of 2016 was slower than the Bank had projected in its July Monetary Policy Report (MPR), although the Bank continues to expect it to strengthen gradually in the second half of this year. The US economy was weaker than expected in the second quarter, notably reflecting a contraction in business and residential investment. While a healthy labour market and solid consumption should remain supportive of growth in the rest of the year, the outlook for business investment has become less certain. Meanwhile, global financial conditions have become even more accommodative since July.
While Canada's economy shrank in the second quarter, the Bank still projects a substantial rebound in the second half of this year. Second-quarter GDP was pulled down by the Alberta wildfires in May and by a drop in exports that was larger and more broad-based than expected. Exports disappointed even after accounting for weaker business and residential investment in the United States, adjustments in the resource sector, and cutbacks in auto production. The economy is expected to rebound in the third quarter as oil production recovers, rebuilding commences in Alberta, and consumer spending gets an additional lift from Canada Child Benefit payments. As federal infrastructure spending starts to have more impact, growth in the fourth quarter is projected to remain above potential. While the strength in exports during July was encouraging, the ground lost over previous months raises the possibility that the profile for economic activity will be somewhat lower than anticipated in July.
Inflation is roughly in line with the Bank's expectations. Total CPI inflation is below the 2 per cent target, mainly because of the temporary effects of lower consumer energy prices. Measures of core inflation remain around 2 per cent, reflecting offsetting effects of excess capacity and past exchange rate depreciation.
On balance, risks to the profile for inflation have tilted somewhat to the downside since July. At the same time, while there are preliminary signs of a possible moderation in the Vancouver housing market, financial vulnerabilities associated with household imbalances remain elevated and continue to rise. The Bank's Governing Council judges that the overall balance of risks remains within the zone for which the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent.
Canada Ivey PMI Tanks to 52.3 in August
The Ivey Purchasing Managers Index (PMI) unexpectedly plunged to 52.3 on a seasonally adjusted basis in August from 57 in July, indicating a weakening Canadian economy. Despite the big drop, it is still above its worst levels of the year, when it declined to 49.4 in May. The consensus estimate was for a more subdued decline to 55.4, according to Thomson Reuters.
The PMI is prepared by the Ivey Business School, and measures month-to-month changes in broad economic activity as indicated by a panel of purchasers from across Canada. Similarly, to other PMI indices, above 50 indicates an increase in activity while below 50 indicates a slowdown.
Breaking down the components: The Employment Index fell sharply to 46.9 from 59.5 in July. The July reading was the best of 2016 and one of the strongest in at least two years. Inventories rose to 61.2 from 55.4 prior, the highest level since reaching 61.4 in January. The Supplier Deliveries Index ticked higher to 46.1 from 44.7 after declining for two straight months. The Prices Index edged lower to 56.7 in August from 57.5 in July, the lowest level since April.
source
USD/CAD Extends Rebound Following BoC Rate Decision
The Bank of Canada left interest rates unchanged at 0.50% this week and warned that the economy could be weaker than it anticipated just two months ago as exports disappointed. However, the BoC also projects an economic rebound in the second half of the year. USD/CAD has maintained a firm tone following the BoC announcement, forming at least a temporary bottom formation. The pair is following through to the upside by a modest amount today, currently trading up 0.14%.
However, resistance levels have yet to come into play, calling into question whether the recent bounce is merely a temporary respite from the recent losses or a more sustainable attempt at a recovery rally. First resistance on a further move higher is at the converging 20 and 100-day moving averages near 1.2950, which corresponds to a 38.2% Fibonacci retracement of the recent decline. The next level of resistance is at the 50% retracement of the recent sell-off just below 1.30. A break above this retracement level would suggest a more sustainable recovery is underway in the pair. With marginally oversold conditions still a factor, the path of least resistance over the near term appears to be to the upside.
The next key event on the Canadian economic calendar is the August employment data set for release on Friday. While the unemployment rate is expected to remain at 6.9%, the number of jobs created is expected to be 3,200, an improvement over the fall in employment of 31,200 in July. In the U.S. tomorrow, Wholesale Inventories are set for release (consensus is at 0.0% versus 0.3% previous).
Canada Aug employment +26.2K vs +14.0K expected
The August Canadian jobs report highlights
USD/CAD forecast for the week of September 12, 2016
The USD/CAD pair initially fell during the course of the week, but turned back around to form a bit of a hammer. This was especially impressive considering that we are now above the 1.30 level, and now I’m starting to forget about the uptrend line that’s on the chart, as I think we are more or less going to continue to see a very slow upward grind longer term. Pay attention to the oil markets, because they of course have a significant effect on the Canadian dollar itself.
USD/CAD Approaches Upper Bound of Range, Breakout Imminent
A five-day recovery has taken the USD/CAD exchange rate back towards range highs, while momentum in the current rally indicates potential for a range break. The pair turned during Asian trading and has shown a steady appreciation with minimal pullbacks. Following the European close, the pair continued to push to fresh highs.
The rally in the pair has been triggered by a combination of strength in the Greenback and a drop in oil prices. WTI crude oil prices (USOIL) shows a decline of 2.59% on the day and has been under steady pressure following the latest IEA forecast calling for oversupply to continue into mid-2017. The report further called for a slowing of demand at a pace faster than initially predicted. The IEA cites uncertainty in underlying macroeconomic conditions as the main factor driving demand. USOIL had recovered to a high of $46.49 on Monday, following dovish comments from Fed Brainard, but has pushed back towards this week’s lows following the IEA report.
A recovery in the US Dollar index (DXY) further boosted gains in USD/CAD today. The index had retreated on Monday but managed to close the day out above support at 95.11. The initial push higher came during Asian trading, and a steady appreciation throughout European and North American trading shows DXY scaling above last week’s high to trade at 95.64 for a gain of 0.51%. The next level of resistance in the index is now seen at 95.97, while the 200 DMA resides slightly above the level at 96.12, adding further resistance. The US Dollar has been the top performer among the majors today.
read more
Teranet Canada Aug house price index +11.4% vs +10.9% y/y prior
Canadian August house price index from Teranet/National Bank
For August, Teranet reported that prices were up 19.5% y/y in Vancouver. That's the same as July despite a 15% foreign buyers tax that was introduced Aug 2. In month-over-month terms Vancouver prices were still up 1.75%.
USD/CAD Consolidates Near Highs As Oil Prices Struggle to Gain
Despite broad-based weakness in the Greenback on Wednesday and an unexpected draw in the weekly inventories report, USD/CAD has been able to sustain recent gains as the pair consolidated near highs throughout the day.
The Energy Information Administration (EIA) reported a draw of 600,000 barrels for the week, against analyst expectations for a build of 3.8mn barrels. The significant deviation from expectations triggered a sharp recovery in oil prices, but gains were not sustained. WTI crude oil (USOIL) climbed to a high of $45.11, briefly showing a small gain for the day, but promptly reversed to fresh lows. The inverse correlated USD/CAD dropped to a low of 1.3128 on the day prior to retreating back to previous highs. Oil prices have seen renewed pressure following a report from the International Energy Agency (IEA) on Tuesday that showed expectations for a further reduction in demand than previously anticipated, while supplies continue to grow. The report calls for subdued demand into mid-2017. USOIL was last seen at $43.57 for a decline of 3.07% on the day.
The US Dollar index (DXY) has been under pressure for most of the day. The index posted a high at 95.67 shortly after the European session closed on Tuesday, and fell into a range. The weekly inventories report served to break DXY lower out of the range, but support at 95.20 caused some reprieve for the index. The level reflects the 38.2% Fibonacci retracement measured from last week’s lows. Further support is seen at 95.11 reflecting horizontal support seen on a daily chart. To the upside, the first hurdle is seen at 95.44, and a move back above the level would negate the bearish momentum from the decline seen in early North American trading.
read more
Canada August existing home sales -3.1% m/m vs -1.3% m/m prior
Existing home sales data from CREA
A drop was expected because of the surprise foreign home buyers tax in British Columbia. If anything, this probably wasn't as bad as expected.
USD/CAD Turns Lower As Oil Prices Recover
After posting a fresh high for the week during the European open, USD/CAD has turned lower as oil prices were seen recovering. Data out of the United States was reported mostly below expectations, causing additional pressure on the currency pair.
Retail sales were reported to decline 0.3% in August, falling short of the expected decline of 0.1%, the figure excluding auto was reported to drop 0.1% against analyst expectations of a rise of 0.2%. The weekly unemployment claims figure was reported at 260,000, up 1,000 from the prior week and slightly below the analyst expectation of 262,000. The Philadelphia Fed manufacturing index came in positive among the mostly disappointing data, printing at 12.8, well above the expected 1.1 and the prior reading of 2.0.
The data triggered a turn lower in the Greenback, and the USD/CAD, but losses were not sustained as the currency pair turned shortly after the release. While the pair returned near previous highs for the day, a failure to break higher resulted in a bearish hanging man candlestick formation on the 4-hour chart, causing additional selling pressure near the end of the European session. USD/CAD was last seen at 1.3152 for a decline of 0.32% on the day.
WTI crude oil prices were seen recovering today. USOIL turned ahead of the early September low and has gained 1.02% on the day thus far, trading at $44.07. The US Data triggered volatility in the instrument, and a marginal low was made on the day prior to the turn higher. Resistance is now seen at $44.47, the horizontal level carries confluence with a 38.2% Fibonacci retracement measured from this week’s high.