Daily Report: Canadian Dollar Lower On Oil, Markets Steady
ActionForex | Aug 23, 2016 06:18AM ET
The financial markets are generally steady as traders are await for Fed chair Janet Yellen's speech at Jackson Hole for clues on rate hike. DJIA closed down -23.15 pts, or -0.12% at 18529.42 but stays well inside last week's range. Similarly, S&P 500 closed down mildly by -0.19 pts, or -0.01%. Asian markets follow lower with Nikkei down -0.2% at the time of writing. Gold recovered mildly from yesterday's dip but stays soft at around 1340. The more notable movement is seen in oil price with WTI reaching as low as 46.62 comparing to last week's high at 48.75. Weakness in oil prices weigh on Canadian Dollar, which is the weakest major currency for the week so far. Other pairs are generally directionless.
Some analysts attributed the strong rebound in oil price, from this month's low at 39.19, on speculation of output freeze. However, it's pointed out that even if there is output freeze, production will be kept at historically high levels. That would eventually have little impact on balancing demand and supply. WTI would likely struggle to find further buying above 50 and there is risk of dipping back to lower side of near term range at around 40. Such development might trigger selling in Canadian dollar ahead.
CAD/JPY formed a short term bottom after hitting 76.74, on the same day as WTI bottomed. Subsequent recovery is seen as very weak, reaching 78.77 only, comparing to the rebound in oil from 39.19 to 48.75. Outlook in the cross stays bearish as it remains well below the falling 55 days EMA and inside medium term falling channel. Break of 75.98 low is expected at a later stage. Though, bullish convergence condition would likely keep contain downside by next long term support at 72.13.
On the data front, Japan PMI manufacturing rose slightly to 49.6 in August. Eurozone PMIs will be the main focus in European session. Swiss will release trade balance and UK will release CBI trends total orders. US will release new home sales later in the day.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.