- BoC Business Outlook Survey underscores rising inflation concerns
- Canada April GDP ahead-forecast 0.3%
- US dollar ending first half of year with robust gains
USDCAD Snapshot open 1.2925-29, Friday-Monday range 1.2837-1.2985, close June 30, 1.2873, WTI oil $108.71, Gold $1803.28
The Canadian dollar traded choppily since Canada Day on July 1 and US Independence Day, July 4. The ongoing fall-out from the end of June rebalancing flows, combined with rising recession concerns in a holiday-thinned trading environment roiled the currency.
Analysts believe a US recession is inevitable, even if the Fed doesn’t agree. Fed officials think they will successfully reduce inflation from its lofty levels and keep the US economy growing. Analysts believe there will be a recession. The only debate is whether it will be moderate or severe.
Those fears have knocked the 10-year Treasury yield down from 3.48% on June 14 to 2.894% in NY today. They also crushed the US stock market. The S&P 500 closed June 30 with its worst H1 performance since 1970.
July hasn’t started much better. Global sentiment is risk averse which is fueling US dollar demand. The Canadian dollar extended its overnight slide in NY trading after S&P 500 futures retreated to its overnight session low.
Asia stock markets closed with small gains except for the Nikkei 225 index, which rose 1.03% in quiet trading. European bourses are all in the red due to recession fears, and the French CAC is leading the pack lower, losing 1.02%.
WTI oil prices traded in a 104.60-$111.30 band and are sitting at 108.00 in NY. Prices continue to be supported by tight supply due to Russia sanctions, and production issues in Libya. JPM analysts speculated that oil would jump to $380.00/b if Russia slashed crude production to 5.0 million barrels/day, as it would hurt Western economies far more than in Russia. Putin said, “thanks for the idea.”
EURUSD is trading at the bottom of its overnight 1.0281-1.0448 range. The single currency is being pummeled by fears of a looming recession caused by punitive measures against Russia and rising inflation woes. A series of weak economic reports lowered risks for aggressive ECB rate hikes.
GBPUSD closed at 1.2179 on Thursday and hit 1.1975 on Friday morning. Prices rebounded to 1.2165 yesterday before retreating to 1.2024 in NY today. The UK economy is in the toilet with the fall-out from Brexit exacerbating its woes.
AUDUSD traded in a 0.6765-0.6892 band since Thursday’s close. Prices peaked ahead of the RBA interest rate announcement and then dropped steadily afterwards. The RBA hiked rates 0.50% as expected and left the forward guidance almost unchanged.
US Factory orders are expected at 0.5% in May, compared to 0.3% in April.
