Article by AlgosysFx
The AUD/CAD looks set to reverse its technical course on lower oil prices, as well as positive economic data from Australia. Amid signs of weakening demand in the US – Canada’s biggest trade partner – and slowing growth in Germany, crude consumption is on a shortfall. Since oil is a major export of the Maple Leaf, faltering oil prices are likely to debilitate the demand for the Canadian dollar.
On signs of economic distress, oil futures dropped for the first time in four days by as much as 0.9 percent. Data from the American Petroleum Institute showed that crude consumption declined 4 percent to 15.9 million barrels a day last week, which constitutes the biggest percentage decrease in a month. Likewise, gasoline usage was the lowest in the past months, according to the API figures.
In a speech at the Global Business Leaders Conference in London yesterday, Bank of Canada Governor Mark Carney acknowledged that the nation’s housing market has begun to ease and the growth of household debt is slowing. He recognized that this is in part due to recent actions by the federal government and the country’s banking regulator, adding that policy makers are prepared to take further measures to stem increases in debt if needed.
The economic docket today is perceived to show that Housing Starts for the month of July slowed down from the prior month. Economists forecast a figure of 212,000 for last month to rival the 223,000 optimistic statistic that beat estimates of 203,000. Should the projections prove accurate, this would post the second lowest data in five months, adding to analyses of an ease in the property market. Also, StatsCan is deemed to put on record that Trade Balance last June stayed in the negative for the third straight month. From a minus 0.8 Billion figure for May, the recent data is to show that the deficit widened to minus 0.9 Billion. These fundamental news are seen to hurt the prospects of the Loonie today.
In contrast, the number of people employed in Australia rose by 14,000, according to the Australian Bureau of Statistics earlier. This Employment Change exceeded the 10,200 median estimate. Further, the jobless rate fell to 5.2 percent last month from a revised 5.3 percent in June. These economic data led the Aussie dollar to rise; also as regional shares climbed following Chinese inflation data that could offer room for further easing in Asia’s biggest economy. With these economic news today, a long position is advised for the AUD/CAD exchanges, to the detriment of the Canadian currency.
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