FX Daily Update
The National Bank of Canada | Aug 24, 2016 08:48AM ET
Positive U.S. data
1. U.S. economic data continue to indicate that growth should be strong in the third quarter. July New Home Sales came out at a level not seen in close to nine years (654,000 units). Moreover, the Purchasing Manager’s Index continues to expand at 52.1. The likelihood of an interest rate hike at the next three Federal Reserve meetings is now as follows (source: Bloomberg, August 24, 2016. In parentheses, yesterday’s probabilities):
- September 21: 28% (24%)
- November 2: 33% (30%)
- December 14: 54% (51%)
Still nothing particularly convincing. We’ll be keeping an eye on U.S. Existing Home Sales today at 10 a.m. and especially Fed Chair Janet Yellen’s speech on Friday. It should be noted, however, that the number of regional Federal Reserve banks in favour of a key rate increase is now 10 out of a total of 12.
2. The price of oil (WTI) has people talking: a correction began on Monday with WTI falling to $46.60; it then rallied to $48.20 yesterday morning on rumours (source: Reuters) that Iran would be open to negotiating a production freeze, followed by another drop late in the day to around $47.50 after API Crude Oil Inventories were announced. In short, it really does feel like summer is ending….
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