All Eyes on Canadian Jobs Data Tomorrow; Bank of England Holds Bank Rate at 0.50%
Published February 8, 2018
The USD/CAD pair has been on the rise in February, and is currently up about 0.25% today, trading in the range of 1.2543-1.2600. There are no economic indicators of note to be released today so all eyes will be on Jobs data out of Canada tomorrow morning at 8:30am EST.
The Bank of England announced a unanimous decision (0-0-9) to hold policy steady today, keeping the official bank rate at 0.50%. Governor Mark Carney noted after the announcement that the BoE’s plans for the removal of policy accommodation is now likely to come sooner, and to a greater extent than previously thought, in an attempt to bring inflation back to its 2% target. Carney also noted a “crucial year” for Brexit negotiations, admitting that the overall impact remained to be seen and could be positive, negative or neutral.
Stocks opened mixed today as investors returned their focus to corporate results; volatility eased after hitting its highest level in more than two-and-a-half years earlier in the week. The market’s main gauge of volatility, the CBOE Volatility Index (VIX), fell to 26.74 on Thursday, still more than twice the levels it held over the past few months. On Tuesday, the index hit its highest level since August 2015. Investors are weighing whether these sharp swings are the start of a deeper correction or just a temporary bump in the nine-year bull market, spurred by concerns over rising interest rates and bond yields.
Gold prices edged lower today, reaching their lowest level in around a month as the dollar firmed amid expectations of more US interest rate hikes this year. Gold is highly sensitive to rising US interest rates because they increase the opportunity cost of holding non-yielding bullion while also boosting the dollar, the currency in which it is priced. A stronger US dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Oil prices remained under pressure today as traders fretted over the surge in US production. Official data confirmed yesterday that US output had jumped to 10.251 million barrels per day, higher than the previous 10.044 million bpd record from back in 1970. At the time of writing, Brent crude is down ~0.50% on the day and WTI crude is down ~0.45%, trading at $65.17 and $61.41/barrel, respectively.