USD/CAD – Canadian dollar hits 6-week high as US oil inventories slump

The Canadian dollar has posted slight gains in the Thursday session. Currently, USD/CAD is trading at 1.3054, up 0.06% on the day. On the release front, there are no Canadian indicators for the remainder of the week. In the U.S, the focus is on durable goods orders. Core durable goods orders is expected to climb to 0.5% and the durable goods orders is forecast to jump to 3.0%. Both indicators recorded declines in the previous release. On Friday, the U.S releases Advance GDP and UoM Consumer Sentiment.

Canadian policymakers are keeping a close eye on Wednesday’s breakthrough in the EU-U.S trade war. On Wednesday, EU Commission President Jean-Claude Juckner met with President Trump, and the talks appear to have been more successful than expected. The parties agreed to hold off on any further tariffs while talks are ongoing. This is a major concession from Trump, who had threatened to impose tariffs on European car imports. U.S tariffs on European aluminum and steel will remain in place, but Juckner pointed out that the U.S has agreed to reassess these measures. The surprise agreement eases fears of a full-blown transatlantic trade war. Will the goodwill displayed by Trump extend into some kind of agreement with Canada as well?

The Canadian dollar posted strong gains on Wednesday, following an Energy Information Administration report showed a huge decline of 6.1 million in U.S crude inventories. This is the second decline in three months, and was much higher than the estimate of 2.6 million. Tensions between Iran and the U.S have also raised concerns about oil supplies, and higher crude prices have boosted the Canadian dollar.

  Risk on as US and Europe avert trade battle

  U.S-E.U calls a ceasefire in the trade war

USD/CAD Fundamentals

Thursday (July 26)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate 3.0%
  • 8:30 US Unemployment Claims. Estimate 215K
  • 8:30 US Goods Trade Balance. Estimate -67.0B
  • 8:30 US Preliminary Wholesale Inventories.  Estimate 0.5%
  • 10:30 US Natural Gas Storage. Estimate 39B

Friday (July 27)

  • 8:30 US Advance GDP. Estimate 4.1%
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 97.1

*All release times are DST

*Key events are in bold

 

USD/CAD for Thursday, July 26, 2018

USD/CAD, July 26 at 8:05 DST

Open: 1.3046 High: 1.3061 Low: 1.3025 Close: 1.3054

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2733 12831 1.2970 1.3067 1.3160 1.3292

USD/CAD inched higher in the Asian session. In European trade, the pair edged lower but has recovered

  • 1.2970 is providing support
  • 1.3067 is a weak line of resistance
  • Current range: 1.2970 to 1.3067

Further levels in both directions:

  • Below: 1.2970, 1.2831 and 1.2733
  • Above: 1.3067, 1.3160, 1.3292 and 1.3436

DAX jumps on Trump-Juckner agreement

The DAX index has posted strong gains in the Thursday session. Currently, the DAX is at 12,722, up 1.12% on the day. On the release front, German GfK Consumer Climate edged lower to 10.6, just shy of the estimate of 10.7 points. Later in the day, the ECB sets its minimum bid rate, followed by a rate conference with ECB President Mario Draghi.

Trade tensions between the U.S and the European Union have cast a pall over relations between the sides, so the success of EU Commission President Jean-Claude Juckner’s visit to the White House was welcome news. The parties announced on Wednesday that they had agreed to hold off on any further tariffs while talks are ongoing. This is a major concession from Trump, who had threatened to impose tariffs on European car imports. U.S tariffs on European aluminum and steel will remain in place, but Juckner pointed out that the U.S has agreed to reassess these measures. The news boosted the DAX index, as automaker shares have jumped. BMW has climbed 3.20%, Daimler is up 2.80% and Volkswagen has risen 3.53%. Bank shares are also higher, with Commerzbank up 1.46% and Deutsche Bank up 1.73%.

The markets are not expecting anything dramatic from ECB policymakers, with interest rates expected to remain at 0.00%. In June, the ECB decided to end its massive bond-purchase scheme by the end of the year, which has amounted to some 2.6 trillion euros. However, the ECB is playing it very cautious regarding any interest rate hikes, with the ECB saying it would maintain record-low rates “through the summer” of 2019. Trade tensions between the EU and U.S have dampened growth forecasts for the eurozone, although the Juckner-Trump meeting has considerably improved market sentiment. The ECB could tweak its guidance but is unlikely to make any changes to current monetary policy.

  Risk on as US and Europe avert trade battle

  U.S-E.U calls a ceasefire in the trade war

Economic Calendar

Thursday (July 26)

  • 2:00 German GfK Consumer Climate. Estimate 10.7. Actual 10.6
  • 7:45 ECB Main Refinancing Rate. Estimate 0.00%
  • 8:30 ECB Press Conference

*All release times are DST

*Key events are in bold

 

DAX, Thursday, July 26 at 7:25 DST

Previous Close: 12,579 Open: 12,705 Low: 12,696 High: 12,778 Close: 12,722

Risk on as US and Europe avert trade battle

Trump/Juncker meeting has results

European Commission President Jean-Claude Juncker did not come away from Washington empty-handed. The two presidents reached an accord which included expanding imports of US liquefied natural gas and soybeans while reducing industrial tariffs on each side. Previously, Trump had threatened to impose a 25% tariff on imports of European cars. If Europe can do it, how about China? That will be the next question on everyone’s lips.

The news came late in the session and helped Wall Street to a stronger close after struggling for most of the session. Boeing and AT&T were drags after disappointing earnings. The US dollar retreated across the board, losing almost 1% versus the Canadian Dollar and touching its lowest level in six weeks.

USD/CAD Daily Chart

Source: Oanda fxTrade

Oil rises on stockpiles drawdown

Data released by the Energy Information Administration showed a larger than expected drawdown on crude inventories in the week to July 20. Estimates suggested a drawdown of 2.33 million barrels however a total of 6.15 million barrels were required. This drawdown more than wiped out the 5.84 million barrels added to stockpiles the previous week.

Source: MarketPulse

ECB in focus on the data calendar

All eyes will on the ECB rate meeting and subsequent press conference today. Not that there are any expectations for any shift or tweak in policy but, as Craig points out, it can sometimes be painful to ignore any central bank meetings, particularly the ECB.

Will ECB offer any surprises on Thursday?

The rest of the calendar is populated with US goods trade balance for June, with the deficit seen widening to $67.0 billion from $64.85 billion. Recall, China’s trade surplus ballooned to a record surplus in the same month, according to data reported earlier this month. Other items include US wholesale inventories and durable goods orders.

There is also a seven-year US note auction which, if yesterday’s five-year auction was an indicator, should be well received. The five-year auction drew a bid-to-cover ratio of 2.61, up from 2.55 at the previous auction and above 2.49 over the past 12 auctions. The five-year yield edged up to 2.815% from 2.719%.

You can see the full MarketPulse data calendar at: https://www.marketpulse.com/economic-events/

GBP/USD – British pound shrugs off strong retail sales

The British pound is unchanged in the Wednesday session. In the North American session, the pair is trading at 1.3141, down 0.02% on the day. On the release front, British CBI Realized Sales dropped to 20, but still beat the estimate of 16 points. In the U.S, New Home Sales dropped sharply to 631 thousand, well off the estimate of 669 thousand.

Retail sales growth remained strong in July at 20, although it was weaker than the sizzling release of 32 points in June, which was largely due to the unseasonable heat wave. However, the indicator is expected to drop in August. On Tuesday, manufacturer orders showed strong growth for a second straight month, with a reading of 11 points. With U.S trade tariffs on EU products threatening to hurt British exports and the manufacturing sector, the markets are keeping a nervous eye on UK manufacturing indicators.  The CBI Manufacturing Council welcomed the strong manufacturing data, but cautioned that “rising trade tensions and ongoing uncertainty over our future trade and customs arrangements are clearly taking their toll on manufacturers’ confidence and investment.”

Tit-for-tat tariffs between the U.S and the EU has seen the trade relationship between them reach a low point. More tariffs could be coming, as the EU has vowed to impose $20 billion in tariffs on U.S products if the Trump administration slaps $50 billion on European goods. Will the nasty trade war worsen or will the sides pull back? There could be important developments on Wednesday, as an EU delegation led by European Commission President John-Claude Juckner meets with President Trump at the White House on Wednesday. Although the UK has one foot out the door, tariffs against the EU are having a negative impact on the British economy, and an improvement in relations between the US and the EU could boost the British pound.

 

GBP/USD Fundamentals

Wednesday (July 25)

  • 4:30 High Street Lending. Estimate 39.1K. Actual 40.5K
  • 6:00 British CBI Realized Sales. Estimate 16. Actual 20
  • 10:00 US New Home Sales. Estimate 669K. Actual 631K
  • 10:30 US Crude Oil Inventories. Estimate -2.6M

Thursday (July 26)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate 3.0%
  • 8:30 US Unemployment Claims. Estimate 215K

*All release times are DST

*Key events are in bold

 

GBP/USD for Wednesday, July 25, 2018

GBP/USD July 25 at 12:30 DST

Open: 1.3143 High: 1.3178 Low: 1.3133 Close: 1.3141

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2852 1.2996 1.3088 1.3186 1.3263 1.3362

GBP/USD was mostly flat in the Asian session. The pair edged higher in the European session but has given up those gains in North American trade

  • 1.3088 is providing support
  • 1.3186 is the next resistance line
  • Current range: 1.3088 to 1.3186

Further levels in both directions:

  • Below: 1.3088, 1.2996, 1.2852 and 1.2706
  • Above: 1.3186, 1.3263 and 1.3362

Will ECB offer any surprises on Thursday?

Euro climbs ahead of ECB meeting

While we may not look back at the ECB meeting on Thursday as one of the defining moments in the eurozone’s long recovery from the global financial and debt crises, or even remember it much at all for that matter, that doesn’t mean there won’t be anything to take away from it, or that markets won’t react.

  • ECB left little to the imagination in June
  • Never a good idea to assume an uneventful meeting
  • Will Draghi succeed in talking down the euro again?

At its meeting last month, the ECB laid out plans for its bond buying program (quantitative easing) beyond the current expiry date of September, opting to extend it until the end of the year at half the pace – €15 billion – and warned that interest rates will remain at present levels “at least through the summer of 2019”.

In providing such a clear path for asset purchases and interest rates for the next year, the central bank effectively covered all bases and barring a significant shift in the data or a change in the global landscape, left few questions if any to be answered, making this meeting a potential non-event.

Juncker/Trump Meeting Eyed as Tariffs Hit Outlook

Should we ever anticipate a “non-event”?

One thing we’ve learned in the past though is not to become complacent when the central banks are involved and in the current environment of trade conflicts and Brexit, things can change very quickly. We have to remember that while the recovery is gathering momentum and making encouraging progress, it is still fragile and could be derailed by a number of events which would require the ECB to step back in and offer its support.

Only this week it has been reported that US President Donald Trump intends to slap 25% tariffs on European auto imports and significantly escalate the trade conflict between the US and EU. Jean-Claude Juncker is currently in Washington looking to calm the growing tensions between the two but it seems that unless he is offering concessions, he may not get very far.

What’s more, the UK and EU don’t appear to be getting much closer to agreeing on the divorce and with eight months to go until exit day, this is a notable downside risk for both economies, with the IMF recently warning that a no-deal Brexit that sees the two revert to WTO rules could wipe 1.5% and 4% off EU and UK output, respectively, by 2030.

In terms of the data, the ECB will likely be relatively content, with unemployment continuing to drop – now at 8.4%, the lowest since December 2008 – the economy growing well despite the dip in the first quarter and inflation gradually increasing, albeit less so on from a core perspective. Nothing has really changed on this front since the last meeting that will concern policy makers.

EURUSD Daily Chart

OANDA fxTrade Advanced Charting Platform

While the euro has been climbing over the course of the last month, after falling following the ECB announcement and very dovish accompanying statements, it’s now only trading back where it was before the meeting which will be a relief to policy makers. It will be interesting to see if anything they say changes this or if Draghi focuses on talking it lower once again.

Why an Upside is Likely For Silver

Silver is having a bad year. Like other metals, silver has declined by more than 8% this year. It has moved from a YTD high of $17.6 and on Monday, it reached the YTD low of $15.1.

Silver is a different metal than gold. While the two metals are found deep inside the earth’s crust, they have different uses. Gold is used mostly as an investment while silver is used mostly for industrial purposes. It is used in the manufacture of jewellery, mirrors, and kitchen products. The biggest producers of silver are Mexico, Peru, and China.

Silver is often known as gold’s poor cousin. This is because an ounce of silver sells for $15 while the same amount of gold sells for more than $1200. Today, the ratio of gold to silver is 1:81.

This year, silver has been on a decline, which is mostly because of the challenging trade issues. It has also underperformed gold, which is down by 6% this year.

Today, silver has reached $15.45, which is slightly higher than the 50-day EMA and lower than the 100-day EMA. The price is also above a key trendline as shown below. If the price rises, it will likely test the $15.6 level.

There is a likelihood that the price of silver will move higher as gold rises. Last week, the US president attacked the Fed for hiking interest rates. While the Fed will likely ignore the president, there are indications that it will reduce the rate hikes in the coming year. If it does this, the price of gold could move higher as the dollar weakens.

The post Why an Upside is Likely For Silver appeared first on Forex.Info.

Australian Dollar Falls After Weak Inflation Data

The Australian dollar fell against the US dollar after the country’s statistics office released the Consumer Price Index (CPI) data for the second quarter. The data showed that the CPI rose by 0.4% in the quarter. This was lower than the expected 0.5%. It was however the same as the quarterly CPI numbers for the first quarter.

On an annual basis, the CPI rose by 2.1%, which was better than the first quarter’s CPI of 1.9%. Traders were however expecting the CPI to rise by 2.2%.

The main contributors to the CPI growth were alcohol and tobacco, clothing and footwear, health, and transport, which rose by 1.6%, 1.3%, 1.9%, and 1.6% respectively.

While the data was not as good as the market was expecting, it was closer to the target of the Reserve Bank of Australia (RBA). The bank has targeted the inflation to rise to 2.0%.

In recent weeks, the Australian data has been encouraging. The economy has continued to add jobs and the unemployment rate has remained stable at about 5.2%. In the past RBA meeting, the officials expressed optimism about the economy but remained concerned about trade and housing prices. On trade, most of Australia’s revenues come from exports. Therefore, if there is a problem on global trade, the economy will be affected. In fact, when the US announced steel and aluminium tariffs, Australia was the first country to protest.

Natural resources are very important to the Australian economy with resources like copper and coal forming an important part of the economy. The prices of these commodities has fallen as the cloud of trade remain.

On housing, the two biggest cities in the country have seen their prices drop. Sydney and Melbourne’s housing problem has persisted as the demand for houses has remained low while the supply is high.

As shown below, the AUD/USD pair has reached 0.7398, which is close to the lowest level since yesterday. In the past few weeks, the pair has traded in a sideways direction after seeing a major drop two weeks ago. This drop came after the RBA officials raised concerns about the issue of trade. Traders interpreted the statement as being dovish. With inflation easing, there is a likelihood that the pair will remain going lower in the foreseeable future.

Meanwhile, in the neighbouring New Zealand, the economic data was not pleasing. In June, the country’s exports dropped to N$4.9 billion. This was lower than the N$5.35 billion exports in May and the N$5.06 billion traders were expecting. Imports on the other hand rose to $5.02 billion, which was higher than the expected $4.92. This led to an increased trade deficit of $113 million. In response to the data, the NZD/USD pair dropped to an intraday low of 0.6785. It has since risen a bit and reached 0.6805.

The post Australian Dollar Falls After Weak Inflation Data appeared first on Forex.Info.

USD/CAD – Canadian dollar edges higher, US durable goods data ahead

The Canadian dollar has posted slight gains in the Wednesday session. Currently, USD/CAD is trading at 1.3128, down 0.20% on the day. On the release front, there are no Canadian indicators for the remainder of the week. In the U.S, New Home Sales is forecast to drop sharply to 669 thousand. On Thursday, the U.S will release durable goods reports and unemployment claims.

Escalating trading tensions continue to worry Canadian policymakers, as the Canadian economy is heavily dependent on its export sector. NAFTA negotiations are expected to intensify now that the Mexican election is over, and one of the key stumbling blocks is the Trump administration’s insistence on higher U.S content in vehicles produced in North America. Auto tariffs is also a key point in the trade war between the U.S and the EU, with the U.S threatening to slap tariffs on European cars. On Wednesday, European Commissioner President Jean-Claude Juckner will meet with President Trump at the White House. If progress can be made on auto tariffs, this could mean that the U.S is showing some flexibility, which could lead to a breakthrough in the NAFTA negotiations.

The markets have been shaken up by recent trade tensions and investors may have to worry about a global currency war. On Friday, U.S President Trump attacked the EU and China for manipulating their currencies and keeping interest rates lower. The U.S dollar has held its own in the last few weeks, but use of the currency as a trade weapon could backfire. This was underscored on Friday, as the U.S dollar was broadly lower after Trump’s tweets criticizing currency manipulation. Trump has said that he prefers a weaker U.S dollar, which could prompt global investors to dump their dollar assets and send the currency lower.

  Trump and Juncker to set the dollar’s tone

  Juncker/Trump Meeting Eyed as Tariffs Hit Outlook

 

USD/CAD Fundamentals

Wednesday (July 25)

  • 10:00 US New Home Sales. Estimate 669K
  • 10:30 US Crude Oil Inventories. Estimate -2.6M

Thursday (July 26)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate 3.0%
  • 8:30 US Unemployment Claims. Estimate 215

*All release times are DST

*Key events are in bold

 

USD/CAD for Wednesday, July 25, 2018

USD/CAD, July 25 at 8:15 DST

Open: 1.3154 High: 1.3166 Low: 1.3120 Close: 1.3128

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2831 12970 1.3067 1.3160 1.3292 1.3436

USD/CAD inched higher in the Asian session and has edged lower in European trade

  • 1.3067 is providing support
  • 1.3160 is the next line of resistance
  • Current range: 1.3067 to 1.3160

Further levels in both directions:

  • Below: 1.3067, 1.2970 and 1.2831
  • Above: 1.3160, 1.3292, 1.3436 and 1.3530

DAX slips as markets eye EU-US trade talks

The DAX index has lost ground in the Wednesday session. Currently, the DAX is at 12,627, down 0.50% on the day. On the release front, German Ifo Business Climate ticked lower to 101.7, just above the estimate of 101.6 points. On Thursday, Germany releases GfK Consumer Climate and the ECB will set its minimum bid rate.

Tit-for-tat tariffs between the U.S and the EU has seen the trade relationship between them reach a low point. More tariffs could be coming, as the EU has vowed to impose $20 billion in tariffs on U.S products if the Trump administration slaps $50 billion on European goods. Will the nasty trade war worsen or will the sides pull back? There could be important developments on Wednesday, as an EU delegation led by European Commission President John-Claude Juckner meets with President Trump at the White House on Wednesday. If the sides can make progress on car tariffs, automaker shares could jump and boost the DAX.

With the global tariff war threatening to hurt German and eurozone exports, investors have been keeping a close eye on manufacturing data. There was positive news on Tuesday, as Eurozone and German manufacturing PMIs continue to point to expansion. The German release improved to 57.3, easily beating the estimate of 55.5, while the eurozone reading of 55.1 was above the forecast of 54.7. Both indicators had dropped over six consecutive months and the July releases put an end to that nasty streak.  Services PMIs were not as strong, as the German and eurozone releases missed their estimates.

  Aussie falters as CPI misses estimate

  Trump and Juncker to set the dollar’s tone

  Juncker/Trump Meeting Eyed as Tariffs Hit Outlook

Economic Calendar

Wednesday (July 25)

  • 4:00 German Ifo Business Climate. Estimate 101.6. Actual 101.7
  • 4:00 Eurozone Money Supply. Estimate 4.0%. Actual 4.4%
  • 4:00 Eurozone Private Loans. Estimate 3.0%. Actual 2.9%

Thursday (July 26)

  • 2:00 German GfK Consumer Climate. Estimate 10.7
  • 7:45 ECB Main Refinancing Rate. Estimate 0.00%
  • 8:30 ECB Press Conference

*All release times are DST

*Key events are in bold

DAX, Wednesday, July 25 at 6:55 DST

Previous Close: 12,689 Open: 12,678 Low: 12,623 High: 12,693 Close: 12,627

Juncker/Trump Meeting Eyed as Tariffs Hit Outlook

Investors look for another boost from earnings

US futures are pointing slightly higher again on Wednesday as indices look to extend the winning streak to three sessions on the back of strong earnings reports.

Investors have been encouraged by the results we’ve seen so far, with lower taxes not the only thing providing a big lift to the bottom line, although they are obviously a considerable contributor. Another 52 companies are preparing to report on the second quarter today, including Facebook, the second of three FANG stocks reporting this week and investors will be hoping for more strong figures after Alphabet’s report was so well received, despite the $5 billion fine that was imposed on it last week.

Trump and Juncker to set the dollars tone

German IFO beats expectations but business worried about outlook

One of the few pieces of data that was scheduled for release today was the German Ifo business climate survey and the results were broadly as expected, with businesses feeling positive about the current climate and anxious about the outlook. Overall, the index fell marginally to 101.7 which was slightly higher than expectations and signals continued decent growth in the eurozone’s largest economy.

The continued decline in the expectations component of the survey is likely being driven by the ever-increasing threat of a trade war, with US President Donald Trump now taking aim at the eurozone as the conflict with China heats up. Germany has been a particular focal point of his attacks on the eurozone, with the country benefiting from a weaker euro which is more a reflection of the region as a whole rather than its own economy.

German IFO Business Climate

German IFO Current Assessment

German IFO Expectations

Juncker heads to Washington in attempt to cool trade conflict

Trump has repeatedly threatened tariffs on the European car industry which would disproportionately hit Germany and is likely factoring into businesses less optimistic outlook. It will be interesting to see if anything can be achieved during Jean-Claude Junckers visit to Washington today, with the European Commission President hoping to convince Trump to drop plans to impose tariffs on the EU, something I am not hopeful he will be able to achieve.

The IFO number did lift the euro in early European trade and it now finds itself around a tenth of one percent higher against the dollar on the day. This comes ahead of the ECB meeting tomorrow, which could be one of the less eventful gatherings after the central bank last month laid out plans for the end of quantitative easing this year and made clear that interest rates will not start to rise until at least the middle of next year. Nothing that has happened since is likely to have changed this view.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.