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Market Update

EncoreFX’s daily market updates are written by our experienced and professional dealing team.

Busy Week Ahead, Dual Jobs Reports on Friday the Highlight

Published August 2, 2016
  • Currency markets continue to adjust to last week's middling US economic data which left much to be desired for those bullish on the US economy, rates, and the greenback
  • An advance reading of Q2 GDP pegged a mere 1.2% growth rate for the US, well below expectations for a 2.6% expansion
  • Data this week may be able to get USD bulls back on track; however, yesterday's ISM Manufacturing data was in-line at 52.6 for July with the leading new orders index printing at 56.9 and the production index coming in at 54.7, both positive signs 
  • This morning, the US reported that Personal Consumption rose faster than expected with a gain of 0.4% in June compared with the 0.3% forecast
  • Friday's employment data from the US will be key in determining market expectations of Fed action for the rest of 2016
  • Jobless claims throughout July trended lower indicating that we could be in store to build on June's massive gain of 287k positions; consensus is for a 180k gain for July with the unemployment rate static at 4.9%
  • Canada is expected to show a gain of 10k positions for July with the unemployment rate ticking up a notch to 6.9%
  • As always, watching the participation rates and average earnings will be key in determining the strength of the headline figures
  • WTI oil prices continued their bearish trend yesterday as front month prices briefly dipped below the $40 mark for the first time since April
  • Fundamentals remain bearish with inventories of crude at risk of another surge, as drilling for new production rose for the first time this year in July
  • Summer driving season failed to put a dent in gasoline inventories and thus refinery demand for crude will likely be weak going forward, especially with autumn maintenance season fast approaching
  • Investments by money managers in crude and refined products show a large net increase in short positions across the oil complex, highlighting that sentiment is overwhelmingly bearish at present

Charts:  USDCAD consolidating once again.  WTI Oil breaks through key support at its 200 DMA.