Published June 1, 2016
- Markets are starting June on the back foot as equities in Asia and Europe fell and U.S. markets are set to open lower as well
- Oil and copper prices are also declining with WTI dropping as much as 1.2% to $48.35 a barrel and copper off by 1.4%
- Overnight data from China wasn’t particularly reassuring as manufacturing indices showed a very tepid level of activity
- The Caixin PMI fell to 49.2 from 49.4 – the 15th month of contraction, which is rather worrying and provides little confidence in a burgeoning turn around any time soon
- Oil prices were likely hampered by the Chinese data as well as the prospect of OPEC’s meeting tomorrow, June 2
- Comments from OPEC officials yesterday expressed satisfaction with where prices are – potentially indicating that coordinated production cuts to support prices are not a priority
- USDCAD is holding its ground in the mid 1.3000’s ahead of key data later this morning from the U.S.
- Industry groups Markit and ISM report manufacturing PMI’s and we also receive Construction Spending and Total Vehicle Sales
- Friday is the big one as the U.S reports Non-Farm Payrolls with forecasts expecting 162K new jobs and the unemployment rate dropping to 4.9% from 5.0%
- If the numbers are very strong (c. +225k jobs created, 4.9% unemployment, and a rising participation rate) this would likely be game, set and match for those expecting the Fed to hike rates in June or July, which could see the USD rise precipitously
USDCAD Technical Glance
USDCAD remains buoyant above the rising 21 Day Moving Average (blue) and the US/CA two year yield spread continues to rise in favour of the USD (white).