- Canada Retail Sales ahead
- Global equity markets under pressure
- US dollar higher, safe-have currencies rise.
USDCAD Snapshot: Open 1.2506-10, Overnight Range-1.2501-1.2536, previous close 1.2504, WTI open $84.29, Gold open $1834.01
The Canadian dollar bounced between minor support and minor resistance overnight as it tracked global equity market price action and Wall Street futures in particular.
Asian equity traders took their cue from Wall Street and sold stocks. The major equity indexes lost ground, led by a 2.27% plunge in Australia’s ASX 200, due to lower commodity prices. The risk-off sentiment continued in Europe, with the German DAX index leading the other major bourses sharply lower.
US equity futures gave back some early NY gains but are above their overnight session lows, on the heels of modestly softer Treasury yields. Gold prices are below yesterday’s closing level but continue to be supported by safe-haven demand.
Canada November Retails Sales are expected to have risen 1.2% m/m, a touch lower than October’s 1.6 result, while the ex-autos component forecast unchanged at 1.3% m/m. The results will have minimal impact on Canadian dollar trading ahead of next week’s Bank of Canada (BoC) meeting.
Economists and analysts debate the odds that the BoC raises interest rates at next week’s monetary policy meeting. Those expecting a 0.25% increase to 0.50% cite strong employment, high inflation, and a positive Business Outlook Survey will trigger the move. Others suggest that ongoing Omicron issues in many regions give officials an excellent excuse for leaving policy as is while allowing the FOMC to set the agenda.
Today, safe-haven demand for US dollars, Japanese yen, and Swiss francs are underpinning those currencies.
The rhetoric surrounding Russia and its intentions for Ukraine is more inflammatory with US President Biden claiming Russia was planning an invasion. It gets more complicated as Germany has ignored US demands to halt the Nord Stream 2 natural gas pipeline, and French President Macron proposes a European solution.
However, the large losses in the Dow Jones Industrial Average, S&P 500, and NASDAQ are really driving risk sentiment. Steep losses in Netflix and Peloton shares have many pundits saying the pandemic-lockdown stock bubble has burst.
EURUSD traded in a 1.1302-1.1345 band, underpinned by the modest dip in US Treasury yields.
GBPUSD dropped to 1.3555 from1.3600 range after disappointing Retail Sales (-3.7%, forecast -0.6%, November 1.0% m/m) and Consumer Confidence data (actual -19, previous -15).
The US economic calendar is empty.
