Canadian Dollar Weakens On Disappointing GDP Data, Oil Prices Decline
July 29 2016 - 6:22AM
RTTF2
The Canadian dollar was lower against most major currencies in
early New York trading on Friday, as oil prices continued its
free-fall and the nation's economy shrank more than expected in
May, in the aftermath of wildfire in northern Alberta.
Data from Statistics Canada showed that the economy contracted
0.6 percent in May, the largest monthly decline since
March 2009.
The decrease in May was mainly due to lower non-conventional oil
extraction, a consequence of the Fort McMurray wildfire and
evacuation.
This was worse than forecasts for a 0.5 percent decline and
follows 0.1 percent gain in April.
Separate data showed that Canada industrial product price index
rose 6 percent in June, primarily due to higher prices for energy
and petroleum products.
Economists had been expecting the index to tick up to 0.1
percent. The index surged up by 1.1 percent in May.
Crude oil futures continued to fall toward $40 a barrel,
extending steep weekly losses on speculation the global supply glut
will worsen.
The Energy Information Administration on Wednesday reported that
commercial crude oil inventories gained 1.7 million barrels in the
week to July 22.
Crude for September delivery declined $0.37 to $40.77 per
barrel.
The loonie has been trading in a negative territory against its
major rivals, except the U.S. dollar, in the European session.
The loonie weakened to 1.4667 against the euro, a level unseen
since June 6. The loonie is likely to locate support around the
1.48 zone.
Flash estimate from Eurostat showed that Eurozone consumer
prices increased for the second straight month in July.
Consumer prices climbed 0.2 percent year-on-year, following a
0.1 percent rise in June. Prices were expected to rise again by 0.1
percent.
Retreating from an early 2-day high of 80.25 against the
Japanese yen, the loonie declined to more than a 2-week low of
78.12. On the downside, the loonie may challenge support around the
76.00 mark.
The Bank of Japan raised the target for exchange-traded fund
purchases, while holding its interest rate.
The bank will increase the purchases of exchange-traded funds so
that their outstanding amount will rise at an annual pace of about
JPY 6 trillion.
The loonie slid to a 2-day low of 0.9935 against the aussie, off
its early 2-day high of 0.9859. If the loonie extends slide, 1.05
is likely seen as its next support level.
Data from the Reserve bank of Australia showed that Australia's
private sector credit added 0.2 percent on month and 6.2 percent on
year in June.
Housing credit gained 0.5 percent on month and 6.7 percent on
year, while personal credit fell 0.1 percent on month and 0.8
percent on year and business credit fell 0.2 percent on month and
climbed 6.6 percent on year.
On the flip side, the loonie spiked up to a weekly high of
1.3076 against the greenback, from a low of 1.3186 hit at 4:00 am
ET. Further uptrend may see the loonie challenging resistance
around the 1.29 region.
The initial estimate released by the Commerce Department showed
that gross domestic product climbed by 1.2 percent in the second
quarter following a downwardly revised 0.8 percent increase in the
first quarter.
Economists had expected GDP to jump by 2.6 percent compared to
the 1.1 percent growth that had been reported for the previous
quarter.
Euro vs CAD (FX:EURCAD)
Forex Chart
From Mar 2024 to Apr 2024
Euro vs CAD (FX:EURCAD)
Forex Chart
From Apr 2023 to Apr 2024