The Canadian dollar got a boost from British polls pointing to a rise of the Stay camp. Over the weekend the sentiment has started to shift after the tragic shooting of pro-Stay MP Jo Cox. The USD had appreciated as investors were looking for a safe haven after fearing uncertainty on the Brexit referendum outcome. Commodities were lower as the USD rose. The CAD was hit on two fronts. Depreciating versus the greenback and with no support from oil prices the pair went back to almost 1.31.
The three biggest factors guiding the fate of the loonie are: The Fed, the Brexit referendum and the price of oil. Brexit fears triggered risk aversion and probably made the Fed opt out of hiking rates in June. The flight to safety flows turned into a USD rally putting further downward pressure on oil prices giving little support for the CAD.
With the Stay campaign staging a close to the wire comeback the pound has appreciated as risk is back on in the markets. The driving season and cheap oil prices has boosted demand for energy and facilitated a rise in oil prices ahead of the EU referendum vote on Thursday.
Despite the easing of Brexit anxiety Minneapolis Fed President Kashkari said today that all policy options would be not the table in case of a win by the Leave campaign.
The USD/CAD lost 0.719 percent in the last 24 hours. The pair is trading at 1.2801 after the Brexit polls in the UK point to a recovery of the Stay camp. Investors welcomed the news and came back to the markets to trade as risk aversion subsided. The USD had gained as the big dollar was seen as a safe haven in the event of Britain breaking away from the European Union. Stocks, oil and the GBP all gained as the Brexit concerns were lower after the release of the weekend polls.
West Texas rose 2.239 percent in the last 24 hours. Trading at $49.23 on a week that will features U.S. Federal Reserve Chair Yellen appearing twice and of course the final results from the Brexit referendum on Friday. Cheap gasoline has driven up global demand helping boost the price of crude despite the record levels of production output.
The yellow metal backtracked after rising as the possibility of a Brexit got reduced. Gold has been one of the beneficiaries of the market’s anxiety about the possible Leave outcome. Given polls and not economic data is providing the market with guidance this week it is clear it will be a very emotional week as traders keep abreast of changes in voter’s preferences.
Canadian wholesale trade rose less than expected in April. The forecast called for a growth of 0.5 percent but the final gain was 0.1 percent with food, beverages and tobacco combined with minerals and precious metals but could barely offset the losses in machinery, equipment and supplies. The wholesale indicators was positive for the first time in three months, but still short of expectations. Up next for Canadian indicators is the retail sales data on Wednesday, June 22 at 8:30 am EDT. Core retail sales are expected to have contracted again as more soft economic data is expected in the second quarter.
CAD events to watch this week:
Tuesday, June 21
10:00am USD Fed Chair Yellen Testifies
Wednesday, June 22
8:30am CAD Core Retail Sales m/m
10:00am USD Fed Chair Yellen Testifies
10:30am USD Crude Oil Inventories
Thursday, June 23
ALL DAY UK EU Referendum
8:30am USD Unemployment Claims
Friday, June 24
UK Referendum Results
4:00am EUR German Ifo Business Climate
8:30am USD Core Durable Goods Orders m/m
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar
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