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26.01.2016 19:21

American focus: the Canadian dollar significantly higher against the US dollar

The British pound rose against the dollar substantially, updating the maximum of 22 of January. Support has currency today's recovery of oil prices and the growth of stock indices. In addition, investors' attention switched to the Fed's decision with respect to interest rates, which will be announced on Wednesday.

A slight pressure on the pound have statements of the Bank of England Governor Mark Carney. He confirmed that the conditions for increasing the interest rates are not available, adding that if necessary, the Bank may even lower rate. Regarding the December Fed rate hikes Carney said the US economy - "the most closed of the developed economies." According to him, the Fed rate hike contributed to the destabilization of the market, but it was not the main reason. According to a survey, the UK economy will recover fairly painless after a difficult start in 2016. According to a survey of economists conducted by the Centre for Macroeconomics, 70% of respondents believe that the fall in the stock market, lower gasoline prices and slowing emerging economies mostly not affected the UK economy. Two-thirds of respondents also believe that the growth prospects of the global economy is also seriously deteriorated.

The euro was mixed against the dollar in response to changes in risk appetite. Against the background of a significant increase in oil prices and demand for the shares of the European currency is not high, as investors prefer higher-yielding assets. Little influenced by US statistics, which showed that the company's service sector started the year with a slowdown in business activity. Preliminary PMI index released by the Markit fell to 53.7 in January from 54.3 in December. Last reading marked the slowest pace of expansion of output in the service sector with December 2014. Although the index is still indicative of strong growth in business activity, the index is now indicates weak growth in four of the last five months.

In addition, it was reported that US consumer confidence index from the Conference Board, improved in January to 98.1 (1985 = 100), compared with 96.3 in December. The index of the current situation was unchanged at 116.4, while the expectations index increased from 83.0 to 85.9 in January. "Consumer confidence improved slightly in January, after increasing in December," said Lynn Franco, director of economic indicators in the Conference Board. "Consumers' estimation of current conditions remained unchanged, while their expectations for the next six months have improved moderately. At present, consumers do not appreciate the volatility in the financial markets, as having a negative impact on the economy."

The Canadian dollar rose more than 200 pips against the US dollar, reaching a peak on 7 January. The main support for the currency has a significant rise in oil prices because of expectations that the large manufacturers may agree to cut production to reduce oversupply in the world market. Iraqi Oil Minister Adel Abdel Mahdi said that he sees signs that Saudi Arabia and Russia show more flexibility in reducing production. Meanwhile, a spokesman for the Kuwaiti OPEC Nawal al-Fuzaya suggested today that the world oil prices in 2016 will remain low, and in the I half of the average price is likely to be less than $ 30, but in the second half of the year will exceed this mark. The reason for maintaining low prices, he called overproduction and low demand growth. A recent Reuters poll showed that oil prices are unlikely to rise significantly in 2016 due to depressed demand and increase supply, while oil production by non-OPEC, is expected to be moderate. Meanwhile, in the Bank of America Merrill Lynch Global Research predicts an average 2016 price of Brent crude oil at $ 46 per barrel. Market participants are also waiting for the publication of weekly data on oil and petroleum products in the United States to measure the volume of demand in the world's largest oil consumer.

Market Focus

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  • Australian unemployment rate stable at 5.6% in June
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