Courtesy Citizens Bank Daily Update.
What is going on?!2016 has not started off on the right foot for the Canadian dollar, whatsoever.Crude has fallen below $30.00 bbl in both the Brent and West Texas which has pushed the CAD to fresh 2016 lows.Today marks a historic moment where the International Atomic Energy Agency (IAEA) might be releasing a report, after a meeting in Vienna, on Iran’s compliance with the agreement to curb its nuclear program.This is particularly important in that Western sanctions against the country will be lifted.This will increase Iranian oil exports as international sanctions are lifted.Analystswith Commerzbank suggest we could be in for another leg lower in the commodity as the market gets used to more supply being added from Iran.This does not bode well for the CAD in the near term.Add to this, global banks and analysts are calling for a Bank of Canada rate cut, which sees a 50% chance priced in for the January 20th meeting next week.
In Asia, data wise, Aussie housing finance unexpectedly rose 1.8% in the month of November and investment in housing returned in November after a steep correction lower in October.The AUD didn’t benefit from the positive data however as it finds itself down 1.5% in sympathy with the other commodity currencies, and on the bleak outlook in China as its stock market officially fall into a bear market.In New Zealand, food price index fell further in December.Loan growth in China eased slightly in December.
In Europe, the Eurozone trade balance remains in a surplus as Italian inflation remains flat and Spain saw deflation in the month of December.In the UK, construction output fell a half of a percent in November as the market was expecting a 0.5% increase.
The real focus, data wise, today is on the slew of data out of the United States.Canada has no data to be released.We have already seen US PPI, in line with expectations and retail sales headline print in line with expectations of a slight contraction of 0.1%, but details within the retail sales report showed worse than expected outcomes.The retail control figure which was expected to increase 0.3% actually fell 0.3%.The retail control is a retail sales figure excluding building materials, motor vehicles and parts, gas stations and food services.This shows that perhaps the lower gas prices hasn’t translated into lower salesvalues, but the spill-over effect of lower gas prices is likely the culprit as it brings prices down for all goods.Later this morning we’ll see US industrial/manufacturing outputs, uMich consumer sentiment and finally business inventories