x
Breaking News
0

Canadian Dollar Lower After Strong U.S. Consumer Confidence

By Alfonso EsparzaMarket OverviewNov 29, 2017 10:04
ca.investing.com/analysis/canadian-dollar-lower-after-strong-us-consumer-confidence-200196416
Canadian Dollar Lower After Strong U.S. Consumer Confidence
By Alfonso Esparza   |  Nov 29, 2017 10:04
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The Canadian dollar depreciated Tuesday with the U.S. dollar gaining on confident consumers and improving housing prices in the United States. Canadian producer prices rose 1.0 percent in October thanks to auto prices being sensitive to a currency fluctuations. Raw materials rose 3.8 percent as energy prices keep rising. Despite the rise in inflation indicators the loonie could not gain a foothold against the USD. The Bank of Canada (BoC) presented its Financial System Review and Governor Poloz held a press conference to discuss the findings of the economic assessment.

In the last review six months ago the central bank had struck notes of concerns regarding high levels of household debt and rising house prices. Now with two rate hikes between them and new regulation in place to avoid a housing bubble, the Bank of Canada was seen as optimistic, but gone were the hawkish undertones of the summer. The Canadian central bank remains concerned with household debt as it exposes borrowers to higher rates but that could be offset by a strong jobs component with growing wages. Poloz said that the risks were unchanged, but the policy changes in housing finance are a step in the right direction. The BoC is not expected to make another adjustment to the Canadian benchmark rate until 2018 as there are improvements in the indicators, but the jury is still out on the price fo crude and the fate of NAFTA.

Trade relations between the U.S. and Canada got thornier after the latter just initiated a WTO case against the U.S. for the duties it imposed on Canadian lumber. This follows the NAFTA challenge issued in early November. The renegotiation of the 23-year-old trade agreement have not gone to plan and in some best case scenarios the deal would be close to being wrapped up before the end of the year. The reality is that the negotiating teams are far apart, specially the U.S. trade representatives who are pushing an America First agenda that leaves little room to compromise.

USD/CAD for Nov. 28, 2017.
USD/CAD for Nov. 28, 2017.

The USD/CAD gained 0.36 percent Tuesday. The currency pair is trading at 1.2815 after Fed Chair nominee went before the U.S. Senate to testify. He remains a hawk in the style of Janet Yellen and talking about the December rate hike. The rise of consumer confidence as reported by the Conference Board is now at a 17-year high, which bodes well for tomorrow’s release of the second estimate of third-quarter gross domestic product (GDP) data. The Bank of Canada Financial System Review and the word form Governor Stephen Poloz could not offset the strong U.S. data and the loonie depreciated.

The Bank of Canada hiked twice in 2017, but that only put the Canadian benchmark rate back to 1 percent where it was when Poloz cut the rate twice to boost the economy ahead of the fall of oil prices. The loonie will face more pressure as the Fed continues its monetary policy tightening pace, while the BoC will be more cautious as it monitors rising household debt.

Job numbers will be released in Canada on Friday, Dec. 1. Statistics Canada will publish the monthly GDP figures as well as the employment report both at 8:30 a.m. EST. GDP is expected to have shrunk by 0.1 percent and there is some anxiety on the job front as the first ADP job report for Canada showed a loss of 5,700 in October. The U.S. GDP for the third quarter is expected to have improved between the first and second estimates, and if the Canadian economy continues to show signs of cooling, it will put more pressure not the CAD ahead of the December monetary policy meetings of both central banks.

WTI for Nov. 28, 2017.
WTI for Nov. 28, 2017.

Oil prices recovered some ground in the last 24 hours. West Texas Intermediate is trading at $57.73 awaiting the news to come out of the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna. The price of oil has already priced in an extension as multiple comments from OPEC and non-OPEC members have pointed to increasing the deadline past March 2018. The main remaining issue is how long will the agreement be extended by. The consensus at this point is for a nine-month extension with a meeting at the six month mark to review.

On Tuesday, a committee made up by OPEC and non-OPEC members recommended the extension until the end of 2018, with the option of a review in June. Comments from energy Ministers have been supportive, but the duration of the deal is still up for debate in the next couple of days.

U.S. production has increased and with the Keystone pipeline restarted operations, but still at reduced capacity. Disruptions in North America due to weather and forest fires has kept production lower than otherwise expected with the OPEC doing the heavy lifting on price stability. The market will be watching for developments in Vienna as the floor of energy pricing has been put in place by the OPEC production cut, and once it reaches its end crude prices will be vulnerable if global demand for energy has not recovered at the same rate as production.

Market events to watch this week:

Wednesday, Nov. 29
All Day All OPEC Meetings
8:30 a.m. USD Prelim GDP q/q
10:30 a.m. USD Crude Oil Inventories
7:00 p.m. NZD ANZ Business Confidence
7:30 p.m. AUD Private Capital Expenditure q/q
Thursday, Nov. 30
8:30 a.m. USD Unemployment Claims
Friday, Dec. 1
4:30 a.m. GBP Manufacturing PMI
8:30 a.m. CAD Employment Change
8:30 a.m. CAD GDP m/m
10:00 a.m. USD ISM Manufacturing PMI

*All times EDT
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Canadian Dollar Lower After Strong U.S. Consumer Confidence
 

Related Articles

Canadian Dollar Lower After Strong U.S. Consumer Confidence

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
Write your thoughts here
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email