Loonie Soft as Oil Price Differentials Weigh

Wednesday, October 10, 2018


The loonie is down this morning as the gap between Canadian heavy crude and international oil prices continues to widen. Building permit numbers were a miss at 0.4% versus 0.5%. Following the housing starts miss yesterday the data may be affecting analysts’ estimates of the Bank of Canada interest rate increase path. A lack of top tier economic data will continue to leave the CAD vulnerable through the week.


Despite producer price index data being in line with expectation at 0.2%, the US dollar is down versus most pairs (save the loonie). US bond yields are off their multi year highs and demand is down. US Treasury Secretary Mnuchin is attending the G20 starting today which could elevate trade and political risk depending on headlines. US consumer inflation data and the treasury currency report will be released tomorrow.


The Euro is up despite risks posed by the new Italian budget and the greater effect on the EU. Both French and Italian monthly industrial production numbers beat expectation with 0.3% vs. 0.1% and 1.7% vs. 0.7% respectively.

Equities are down across the board: the Dow down 0.55%, the S&P down 0.75%, NASDAQ down 1.80% and the TSX down 0.90%.  Crude Oil is down 0.55% this morning ($74.27) while Gold is up a marginal 0.03% ($1,191.90).


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