The Canadian dollar is trading lower against the US dollar after the end of the fourth of July holiday. Energy prices fell after investor concerns on the multiple signals of economic slowdown worldwide. Crude prices are down more than 4 percent today after fears Brexit and anxiety surrounding a possible Italian referendum.
Purchasing Managers Index Canadian Manufacturing (PMI) released on Monday showed a slowdown in the manufacturing sector in the second quarter of 2016. The manufacturing PMI was 51.8 compared to 52.1 months. The reading is higher than 50 which means expansion, but the slowdown is ahead of the Brexit results could mean Canada has slowed with greater challenges yet to have an impact.
The Bank of Canada (BoC) released the summer survey of business prospects and this document also revealed that while exporters are optimistic drag on commodity industries published is too large to compensate
the greatest risks to the Canadian economy remain :. Brexit, Fed funds rate and the oil price. Brexit continue to exert downward pressure on the markets as the process to exit E.Ü. is not simple, even after the democratic vote of the referendum. The US Federal Reserve is not expected to raise rates after the lack of stability in global markets after the shocking British vote, but at least one more rate hike might be possible in 2016, whether the Fed was not forced action with a rate cut before that if the US economy deteriorates. Oil prices are caught in a glut of supply and obvious speculative flows all this happening while investors are suffering the impact of the vote Brexit.
USD / CAD gained 0.774 percent in the last 24 hours. The pair is trading at 1.2947 after the end of the fourth US holiday in July. The lack of liquidity during the holiday session was positive for the CAD, but once the American traders returned to their desks and combined with falling oil prices CAD was no support and began to rise at 1.30 price. USD / CAD hit 1.3118 in the week following the U.K. E.Ü. referendum vote, but managed to return to 1.2862 after Brexit process was not as simple as invoking Article 50 of the Treaty of Lisbon (which has not been done yet). Risk appetite returned before the long weekend in the US, but now news of the fragility of the Italian banking system and the threat of a referendum to determine its political position threatens to add to uncertainty already volatile market.
West Texas has lost 4.71 percent during the past 24 hours. WTI is trading at $ 46.50 after fears of a post World Brexit economic downturn and considerable evidence of a glut of crude supply. The beginning of 2016 came with a drop in oil prices as Chinese stocks suffered a sell and the rapid decline of oil in 2015 was accelerated. Informal communication between Saudi Arabia and Russia through the media brought hope of a freeze on oil production was possible, and even if the Doha summit did not bring an agreement at least the channels communication are opened which led a rebound in oil prices.
Commodities in general were affected by the outcome of the British vote on the EU referendum. Declining demand and a flight to safety pushed the lowest price.
This week will be difficult for CAD operators with the American news Job dominate market direction. The fourth of July party postponed the usual release schedule with ADP to be released on Thursday, the same day as the unemployment claims and a day ahead of the biggest indicator of the US Non-Farm employment market (NFP ). But first place is the release of the Federal Open Market Committee (FOMC) of the minutes of the June meeting. Released three weeks after the meeting has evolved since that meeting. Brexit was a known risk as opposed to a reality and it changes how the Fed notes Member reflections on the path of monetary policy in the US will be considered by the market.
market events to watch this week:
Wednesday, July 6
8:30 CAD trade balance
10:00 am USD ISM non-manufacturing 2:00 p.m. USD FOMC Meeting Minutes
Thursday, July 7
4:30 GBP manufacturing Production m / m
8:15 USD ADP non farm employment Change
8 30 USD unemployment claims
11:00 USD crude oil stocks
Friday, July 8
8:30 CAD employment Change
8:30 CAD rate unemployment
8:30 am USD hourly earnings m / m
8:30 USD non-farm employment Change
8:30 USD unemployment
* All times EDT
for a complete list of events planned in the foreign exchange market check the economic calendar MarketPulse
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