Canadian Dollar Weighed Down By Oil And Poloz Testimony
Crude oil hasn’t shown any signs of bottoming out recently, hinting that there may be further downside in the coming days. This has been bearish for the positively-correlated Canadian dollar, as it might spur another wave of production cuts and company layoffs.
caution
In today’s testimony, Bank of Canada Governor Stephen Poloz said that they have other monetary policy options aside from zero interest rates in order to keep growth supported. He cited negative deposit rates, asset purchases, and forward guidance among the tools they can make use of if necessary.
USDCAD is up 88 pips to 1.3585 (+0.64%), CADJPY is down 84 pips to 90.52 (-0.94%), EURCAD is up 172 pips to 1.4800 (+1.18%), and GBPCAD is up 70 pips to 2.0388 (+0.35%).
US dollar returns gains on downbeat JOLTS data
A few concerns about the US labor market resurfaced when the JOLTS job openings figure dropped from 5.53M to 5.38M for October instead of rising to the projected 5.59M reading. Quit rates haven’t been so bad at 1.9% while hiring rates have still risen to 3.8% so the decline isn’t likely to prevent the Fed from pursuing its liftoff plans.
EURUSD is up 57 pips to 1.0894 (+0.53%), GBPUSD is flat at 1.5000, USDJPY is down 38 pips to 122.97 (-0.31%), and USDCHF is down 77 pips to .9921 (-0.77%).
GBP weaker on downbeat manufacturing production
Apart from the commodity currencies, the British pound was also one of the weakest of the bunch after seeing weaker than expected UK data. The Halifax HPI registered a 0.1% drop instead of the projected 0.3% gain while the manufacturing production report showed a sharper than expected 0.4% decline.
This sets the tone for a potentially downbeat statement from the Bank of England, with policymakers likely to reiterate their concerns about inflation and growth as they did in their previous policy decision. The MPC minutes are also up for release at the same time, and this should shed more light on whether biases have shifted or not.
Chinese CPI and RBNZ decision coming up
The Aussie and the Kiwi took a break from their tumbles, as traders probably booked profits ahead of the Chinese CPI release. A climb from 1.3% to 1.4% is expected, which might give AUD a short-term boost.
Also lined up for the day is the Reserve Bank of New Zealand’s interest rate statement. Investors are still split on what might happen next, with some still expecting a 0.25% rate cut to 2.50% and others predicting that the central bank would sit on its hands for now.
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