USD Take A Breather, Crude Oil Confounds
The National Bank of Canada | Dec 16, 2016 08:44AM ET
Redrawing The Economic Landscape
After a relatively agitated week, markets appear to be in somewhat of a lull as the USD takes a breather in its climb this morning. There’s no denying that a certain consensus appears to have been established that the greenback will continue to gain against its peers on the whole. The euro is certainly one of the currencies drawing the most attention, due to the growing possibility that it will reach parity with the USD. Meanwhile, China is leaving nothing to chance and has pegged the value of the yuan to its lowest level in more than 8 years.
Another closely watched topic is crude oil, given the multitude of contradictory developments. Between the announcement that Kuwait will reduce its output for its European and U.S. clients and the fact that U.S. inventories could remain at peak levels, it’s becoming difficult to determine a direction for crude oil prices (WTI). In Canada, yesterday’s disappointing Manufacturing Shipments (-0.8%) may point to domestic economic growth being even weaker. Moreover, with the Bank of Canada confirming yesterday that household debt levels and the unbalanced real estate sector remain a serious risk for the economy, it’s tough to be upbeat about the loonie.
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