Daily Market Update

Foreign Exchange Daily Market Update

Thursday, February 23, 2017

CAD regains strength after Fed Minutes

Continuing on the whipsaw trading pattern of the past month, the CAD has today regained strength against the USD after the Federal Reserve meeting minutes yesterday. While the Fed stated that the economic data is stable and there is a good case for a rate hike to be made, there is now considerably less chance of a rate hike happening in March. Further gains were made this morning with in line unemployment claims and crude oil inventories.

Economic data for the US is light today, with only unemployment claims being of note. The claims printed at 244K vs. an expected 242K showing the economy is maintaining its growth rate, albeit more in line with expectations than previously thought. Crude oil inventories printed with a small gain at 0.6M barrels, but compared to expectations it of a build of 3.4M this is a good sign of the oil market stabilizing.

The CAD has started to sell off today based on highly disappointing retail sales numbers in Canada. Core Retail Sales m/m came out at -0.3% vs. an expected 0.8%, while overall retail sales printed at -0.5% vs. 0.1% expectation. This indicator continues the data trend pointing towards a lackluster economy in Canada. The major drop in the CAD was tempered through the course of the morning as market participants shifted their focus to speculation on the content of the Federal Reserve Meeting Minutes this afternoon.

The EUR has started to lose ground across most currency pairs overnight, with polls showing a gain in popularity for National Front Party. This is of great import to the Euro zone as one of the major policy points for the NFP and its leader Marie Le Pen is to withdraw from the Eurozone and a return of the French Franc. Most analysts suggest that this outcome has a very slim chance of actually coming to pass, but with political surprises in the past 2 years the markets are definitely jittery.

Equities are mixed this morning: the Dow down 0.01%, the S&P down 0.10%, NASDAQ down 0.7% and the TSX up 0.09%. Crude Oil is up 1.77% this morning ($54.54 USD/bbl) while Gold is also up 0.95% ($1249.14 USD/oz).

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