Loonie slumps on taper concerns, China data

The Canadian dollar today fell to its weakest level against the dollar in a week, as a combination of strong US economic data and comments contained in the minutes from the last FOMC meeting raise fears that the Fed might be ready to taper its stimulus.

By mid-afternoon in New York, USD/CAD had risen 0.69% to 1.0528, a one-week high. The Canadian dollar is often seen to move in tandem with risk appetite and has, as a consequence, shown to be vulnerable when expectations for Fed tapering draw in to shorter time-frames.

Yesterday’s minutes from the last FOMC meeting show Fed officials ready to taper in ‘coming months’ should the US economy stay in line with their forecasts for improvement. Today’s labour report showing a sizeable drop in jobless claims for last week plays into that scenario, which has pressured the Canadian dollar.

Appetite for ‘growth currencies’, such as the Loonie and the Australian dollar, has also been hit today by a report showing unexpectedly weak growth in Chinese manufacturing activity. The HSBC flash manufacturing PMI for November dropped to a level of 50.4 from October’s final reading of 50.9 . While far from disastrous (this is the second highest reading in the last seven months), it does suggest that the Chinese economy may be starting to slow down after a strong stretch over the last few months.

Canadian CPI and retail sales data are released tomorrow. The Bank of Canada has a target range for CPI of 1% to 3%, so tomorrow’s result could have a direct impact on monetary policy. Governor Stephen Poloz removed the so-called tightening bias from the rate announcement following the central bank’s last policy meeting. A poll of analysts conducted by Bloomberg points to a CPI rate of 0.8% for October and such a result would justify Mr Poloz’s position of adopting a less hawkish stance.

Mr Poloz spoke before Parliament in Ottawa yesterday and essentially said nothing had changed since the last policy meeting. ‘The bank judged on October 23 that the substantial monetary policy stimulus in place remained appropriate and decided to maintain the target for the overnight rate at 1%,’ he said. ‘Since then, while some new data points have been released, our outlook remains roughly the same.’

Denne informasjonen er utarbeidet av IG, forretningsnavnet til IG Markets Limited. I tillegg til disclaimeren nedenfor, inneholder ikke denne siden oversikt over kurser, eller tilbud om, eller oppfordring til, en transaksjon i noe finansielt instrument. IG påtar seg intet ansvar for handlinger basert på disse kommentarene og for eventuelle konsekvenser som et resultat av dette. Ingen garanti gis for nøyaktigheten eller fullstendigheten av denne informasjonen. Personer som handler ut i fra denne informasjonen gjør det på egen risiko. Forskning gitt her tar ikke hensyn til spesifikke investeringsmål, finansiell situasjon og behov som angår den enkelte person som mottar dette. Denne informasjonen er ikke utarbeidet i samsvar med regelverket for investeringsanalyser, så derfor er denne informasjonen ansett å være markedsføringsmateriale. Selv om vi ikke er hindret i å handle i forkant av våre anbefalinger, ønsker vi ikke å dra nytte av dem før de blir levert til våre kunder. Se fullstendig disclaimer og kvartalsvis oppsummering.

CFDer er komplekse instrumenter som innebærer stor risiko for raske tap på grunn av giring. 79 % av alle ikke-profesjonelle kunder taper penger på CFDer hos denne leverandøren.
Du burde tenke etter om du forstår hvordan CFDer fungerer og om du har råd til den høye risikoen for å tape penger.
CFDer er komplekse instrumenter som innebærer stor risiko for raske tap på grunn av giring.