Oil Prices Leap, Canadian Dollar Stumbles
Oil prices have surged over the past few days. WTI oil spiked to $50.40/barrel overnight, supported by expectations that growing demand will outstrip production due to Opec’s oil production cuts. In addition, the US sanctions against Venezuela for rigging an election have added another layer of support, warranted or not.
However, a mix of weaker than expected Eurozone data ahead of a heavy US economic data calendar led to profit taking and prices dropped to $49.97/barrel in early New York trading.
The Canadian dollar has not received help from the latest round of oil price increases as the USDCAD decline has stalled in the 1.2415 area. That may be because traders are already short USDCAD and are looking for additional incentives to before adding to their positions. Traders may be also leery of selling more USDCAD ahead of Friday’s US employment report. At the same time, USDCAD top side is limited due to diverging Canadian and US interest rate policies.
There is plenty of US data on tap today June Personal Consumption/Expenditures (PCE) are forecast at to rise 0.1 percent in June, unchanged from May. The ISM Manufacturing Purchasing Managers Index (PMI) is forecast at 56.6, a decline from May’s 57.8 result. Construction Spending will jump to 0.4% from 0.0% in May.
If there is a reaction to this data, it will likely be short lived. Traders believe the FOMC is on hold for the balance of 2017 or more accurately, 49.6% of them. There are still 50 days to go before the September meeting, so it seems unlikely that today’s US data will change that view.
but still is offered. Japan Manufacturing PMI was a tick lower at 52.1 (52.2 previously)
In Europe, Euro area Manufacturing PMI’s were slightly below forecasts. The Eurozone PMI also missed, coming in at 56.6 instead of 56. 8.. That was enough to take EURUSD from its peak of 1.1843 down to 1.1808 where it is in New York trading. Eurozone GDP growth was 0.6%. q/q, as expected.
GBPUSD popped and is flirting with major resistance in 1.3250 area, supported by better than expected UK PMI data.
FX Ranges for major currency pairs