The Canadian dollar is the worst performing major G-10 currency since New York opened on Friday, losing 0.59% against the US dollar. The losses were caused by a sharp drop in oil prices, and also a demand for safe haven in US dollars over fears of the delta-variant coronavirus.
West Texas Intermediate fell from US $ 74.20 / bbl Friday to $ 70.65 / bbl yesterday. Traders feared the spread of coronavirus outbreaks would disrupt the global economy and reduce demand for crude even as the Organization of the Petroleum Exporting Countries increased production.
Traders were also cautious following the drop in 10-year US Treasury yields from 1.261% on Thursday to 1.15% yesterday. Weaker-than-expected data from the Institute for Supply Management’s U.S. Manufacturing Purchasing Managers Index helped undermine prices. Prices rebounded 1.19% today, supported by comments from Fed Governor Christopher Waller. He said if the next two jobs reports were as strong as the last one, “then I think you’ve made the progress you need. In my opinion, it’s substantial progress and I think you may be ready to make an announcement in September. “
The direction of the Canadian dollar is at the mercy of the sentiment of the US dollar. Traders are focusing on the Fed and whether officials will announce a reduction program sooner rather than later. Friday’s US jobs report is expected to show that the US economy has created 900,000 jobs.
Canada is expected to have created 100,000 jobs in July.
European investors pushed the main stock market indices to new records, led by a 0.93% gain in the French CAC index. Wall Street futures are also higher. Oil prices are firmer while gold is trading lower. 10-year US Treasury yields are at their overnight high of 1.195%.
The Chinese government continues to tighten the screws on investors under the guise of risk management. Shares of Tencent (the world’s largest video game publisher) fell more than 10% after state media called online games “spiritual opium.”
EUR / USD has fallen from around $ 1.1860 to $ 1.1895 since the Monday opened. The single currency was unable to maintain the bullish momentum in the slightly higher-than-expected eurozone manufacturing PMI, in part due to fears that the spread of cases of the delta-variant coronavirus could derail the global economic rebound.
AUD / USD rose from $ 0.7328 Monday to $ 0.7407 today, after the Reserve Bank of Australia (RBA) policy meeting was more dovish than expected. Traders were short on the AUD / USD, expecting the RBA to delay reduction plans due to the latest coronavirus outbreaks and foreclosure measures. They did not do it. The RBA will reduce purchases of Quantitative Easing in September, as previously announced.
The US and Canadian economic calendars are light.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian bureau de change that offers Canadians better rates than banks.