Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.4060-1.4310
Euro 1.6120-1.6370
Sterling 1.8820-1.9070
WTI Oil (opening level) $68.51
The CAD/USD is opening at 1.4187 ( 0.7049 )
The EUR/CAD cross may further appreciate as the commodity-linked CAD faces challenges as global oil prices decline. It is up approximately 0.5% for the week. Crude oil prices decline amid easing geopolitical tensions in the Middle East, sparked by a series of diplomatic breakthroughs between the US and Iran.
Positive changes in the war in Iran have successfully lowered the geopolitical risk premium that previously kept energy prices elevated. For Canada, these cheaper oil prices are reducing energy-driven inflation, which in turn reinforces market expectations that the Bank of Canada could adopt a more dovish monetary policy stance moving forward.
Canada’s domestic manufacturing sector showed a modest sign of resilience. The S&P Global Manufacturing Purchasing Managers Index edged up slightly to 53 in June, compared to 52.9 in May. While this points to a continuing but gentle expansion in manufacturing activity, it hasn't been enough to offset the broader drag from the slumping oil market. As a result, the Canadian Dollar remains vulnerable against its American counterpart.
Headlines
· The US labour market softened in June: Payrolls rose just 57K, below the 113K forecast, while April–May gains were revised down by 74K. Unemployment fell to 4.2%, but mainly due to a 720K drop in the labour force, pushing participation down to 61.5%.
· US factory orders fell 1.3% in May: The decline was smaller than expected and driven by weaker transport equipment and aircraft orders. Ex-transportation, orders rose a solid 1.9%, while nondurable goods gained 2.2%.
· Trump and his allies renew a push to reshape the Fed: After the Supreme Court blocked the removal of Governor Lisa Cook, the administration is exploring ways to replace Fed officials with its own picks, while also eyeing the Atlanta Fed leadership vacancy as an opportunity to expand its influence.
Key Points
· Equities: US breadth improved despite a chip selloff, Europe rallied on healthcare and financials, Asia split as Korea plunged.
· Volatility: VIX eased despite a tech-specific vol spike, markets shut for the holiday
· Digital Assets: Bitcoin and Ether held steady despite the tech selloff, miners diverged sharply lower
· Commodities: Gold rises as weak jobs report and lower energy prices reduce rate hike odds
· Fixed Income: US short-dated treasuries rally on soft US jobs report.
· Currencies: US dollar sold off after soft June jobs report.
· Macro: US Market closed