CAD Recovers on Trade Data

Wednesday, June 6, 2018

The CAD is strong and rallying on the back of both trade news as well as positive fundamentals. Headlines out of the US have suggested that Secretary Mnuchin has made a push to exempt Canada from aluminum and steel tariffs proposed by Trump. Trade Balance numbers out of Canada were encouraging coming in well above the -3.4B expected by analysts at -1.9B. Building Permits were down however falling 4.6% compared with the expected fall of 1.0%.

 
The USD is weak and falling against most of the G10 currencies with the exception of the JPY and CHF. News was limited to second tier release which came out ahead of their respective expectations. Revised Nonfarm Productivity, Revised Unit Labor Costs and Trade Balance numbers were all beats of 0.3%, 0.2% and 3.8B respectively. Crude Oil Inventories showed a surprise build of 2.1M barrels, a stark contract to the expected draw of 2.0M barrels.

 
The EUR is strong and up almost 0.5% against the USD this morning and outperforming most of the G10 currencies. Expectations for and ECB tightening have increased with many expecting a rate normalization in the second half of 2019. The near term trends support EUR strength and we should see gains at least in the coming sessions.

 

Equities are mixed this morning: the Dow up 0.32%, the S&P up 0.09%, NASDAQ down 0.10% and the TSX down 0.15%. Crude Oil is down 1.19% this morning ($64.74) while Gold is up 0.26% ($1,299.81).

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