Us equities continue to rally with both the Dow Jones and S&P500 closing at record highs as risk on sentiment continues to flood the market. The risk on sentiment has led to a selloff in gold as we saw the precious metal trade 50USd off its recent highs while crude oil gained 4.5% yesterday amid geopolitical fears in the South China sea where china is said to be ignoring the Hague’s findings of encroachment onto Philippines sovereignty, and further violating the space which could lead to crude oil supply route slowdowns.
In fx, the USD index finished flat after an initial sell off of the USD while the JPY weakened for the second day in a row as rumours of the BOJ easing maintains a bearish tone for the currency. The GBP ended the day higher by over 2.5 cents as it rallied for the 4th straight day on what appears to be profit taking ahead of key economic data being releases tomorrow in which the BOE will announce its measures post Brexit. They are largely expected to ease monetary policy and we are likely to see a decline of the GBP to perhaps new lows.
Today is a key day for Canadian markets as we see the BOC come to the foreground with their Monetary Policy Report, Rate Statement, overnight rates and a Press Conference which will all be scrutinised by markets to try and decipher the banks current positon and more importantly the banks future outlook on the Canadian economy and the CAD. A more hawkish tone would see the CAD strengthen while a more bearish tone would see the Cad weaken. Also adding to the CAD`s big day is the release of the US Crude Oil Inventories which given the CAD`s strong correlation with crude, we would see some more volatility.
Finally, with the Australian dollar as strong as it is and more specifically with AUDUSD at key resistance since it completely reversed its post Brexit losses, today’s employment data is of extreme importance with better than expected data to drive the AUD further to the upside, while worse than expected data will see the RBA, which has been touting for a weaker AUD, smiling as the AUD weakens.
Today’s key economic data is as follows:
- BOE Credit Conditions Survey
- Import Prices m/m expected at 0.6%
- BOC Monetary Policy Report
- BOC Rate Statement
- Overnight rates expected unchanged at 0.5%
- BOC Press Conference
- Employment Change expected at 10.1K
- Unemployment Rate expected at 5.8%
- Crude Oil inventories expected at -2.3m