Loonie Soft as Oil Prices List Lower

The Canadian dollar is up substantially this week as stronger oil prices and overall risk sentiment has boosted the loonie. Oil has rallied from $43.00 U.S. a barrel to $51.00 in the past two weeks, in the same period the loonie has appreciated 2.4% against the U.S. dollar. Today, Bank of Canada Deputy Governor Sylvain Leduc is speaking, and economists are not expecting any new information or divergence from recent rhetoric. With no Canadian data set for the remainder of the week, traders will turn to technicals and commodities for direction.

The U.S. dollar remains soft but was able to regain some loss ground today. U.S. data was mixed this morning with Unemployment Claims numbers releasing slightly better than expected while Goods Trade Balance missed target. Unemployment Claims figures released at 234,000 versus the forecast of 238,000 while Goods Trade Balance came in at $-67 billion versus the forecast of $-64.7 billion. Today, Federal Reserve Governor Lyle Brainard is speaking on the global economy at 10:00 EDT. Commodity prices are soft today as markets remain cautious going into the Organization of the Petroleum Exporting Countries meeting today. It is widely expected that OPEC will extend production cuts for another nine months.

Experts expect a range today of $1.3384 to $1.3449

The euro’s gradual appreciation has continued for the month of May, in fact, the euro is the best performing major currency in 2017 as improved domestic data combined with a slew of political wins for pro-euro candidates have traders looking favourably on the Euro. The European Central Bank members’ viewpoints are mixed as some members are keen to reduce Quantitative Easing in light of recent domestic performance, while others are still wanting further economic growth before pulling back on QE. With little in the way of E.U. data for the remainder of the week, the market will turn to overall sentiment to drive price direction.

Observers expect a range today of $1.5007 to $1.5104

U.K. Gross Domestic Product fell just shy of expectation, releasing at 2.0% y/y and 0.2% q/q when forecasts were for 2.1% y/y and 0.3 y/y. BBA Loans for House Purchase in April also underperformed and printed at 40,750 when expectation was for 40,800. The pound sterling is currently trading at $1.7413.

Traders expect a range today of $1.7348 to $1.7458

The Australian dollar tested its recent high again overnight but was unable to sustain its gains as the commodity currency trades back lower on the back of weaker commodity prices. Specifically, iron ore saw prices dropped over 2% pushing it back to its recent lows. Traders expect the commodity space to stay cautious going into the OPEC meeting today.

Oil (WTI): $50.70 U.S. per barrel

Gold: $1,256.70 U.S. per ounce

Silver: $17.22 U.S. per ounce

Copper: $2.5856 U.S. per tonne

Dollar Index: 97.17

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