Buck steady, Canadian Dollar surging post-vote
The U.S. Dollar is trading within mostly unchanged ranges following an overnight session marked by disappointing equity-market performance and conflicting reports about possible negotiations to end the Ukraine-Russia war.
While stock exchanges had initially rebounded to start the week, the poor start of an initial public offering in South Korea renewed pessimism about the growth of artificial intelligence. Elice, Inc., the newcomer in the tech space, saw its value plummet by 32.0% on its opening day. It was the worst reception for any sizable company in the country’s history.
Meanwhile, there is some hope in reports of efforts to bring Russian President Vladimir Putin into negotiations involving China and the U.S. to end the war in Ukraine. Although no details have been provided, it would provide significant relief across asset classes, particularly in Europe, if talks materialized. The Middle East front remains a source of volatility with oil prices continuing to rise.
Domestically, several economic indicators bear watching, including the Philadelphia Fed Non-Manufacturing Activity survey for October, which highlighted negative outlooks in September’s results. September housing starts and building permits will also be released at 8:30 a.m.
What to Watch This Week…
- U.S. PMIs, Euro-zone PMIs on Friday
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR
The Euro stopped depreciating after declining since last Friday amid growing unrest in France and other European cities. Many businesses have suffered from looting while some historic buildings have been damaged by violence. On fundamentals, a ZEW Survey of Expectations for this month revealed that respondents’ outlook had worsened since September with affordability and inflation cited as the main concerns for business growth. One silver lining was August construction output, which expanded by 1.8%, lifting the annual rate from -0.2% to 1.4%.
CAD
The Canadian dollar is the best-performing currency against the buck, as the Bank of Canada’s hawkish stance, a referendum in Alberta, and rising oil prices are improving its fortunes. The “loonie” is climbing as the odds have increased that the BoC will raise interest rates when it meets next week, on October 28th. The probability currently stands at 85.0%. Politically, stability prevailed, with voters unequivocally rejecting a referendum proposing Alberta’s separation from the rest of Canada. Finally, Brent crude oil is up 1.9%, which benefits Canada’s exposure. Perhaps the advance will not be fleeting.