CAD Down Despite Oil Up

Wednesday, January 10, 2017

Despite oil breaking above $63 a barrel, the CAD is under pressure today versus most currencies with misses in monthly building permits and import prices. Building permits issued declined 7.7% while import prices were up 0.1% versus the expected -0.7% and 0.4%, respectively. The only domestic release before the Bank of Canada meeting Jan 17 is New House Price data tomorrow leaving, the CAD vulnerable to external releases and position consolidation.

The US dollar is broadly lower against major currencies (except the CAD) on reports China may slow down or halt their US treasury buying program. As the largest holder of US debt, a change in their program could cause a large sell off in the USD. US Economic releases are light until later in the week with important inflation data on Friday.

The EUR is up versus the CAD and USD on light news. With fading geopolitical risk and ECB policy makers hinting at gradual tightening of monetary conditions, it is likely the Euro will gain into the future. ECB monetary policy meeting account statements are released tomorrow and inflation data in the form of Eurozone CPI will be released January 17.

Equities are down slightly across the board this morning: the Dow down 0.25%, the S&P 0.33%, the NASDAQ 0.52% and the TSX 0.06%. Crude Oil is up 0.64% this morning ($63.39) while Gold is up 0.52% ($1,320.50).

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