The canadian dollar fell moderately against the U.S. dollar, approaching to a minimum on 9 August. The pressure on the currency has had a drop in oil prices and weak data on the GDP of Canada. Statistics Canada reported that the economy contracted in the second quarter, being slightly below expectations, as exports posted their worst quarterly figure in more than seven years. The gross domestic product of Canada fell by 1.6% yoy in the second quarter to 1.78 trillion canadian dollars. Expectations were at the level of a 1.5% drop, according to economists Royal Bank of Canada. The decline follows a revised growth of 2.5% in the first quarter, compared to the early estimate of expansion of 2.4%. Data for June showed that Canada’s economy finished the second quarter on a strong note, as the production of energy that depend on the forest fires in Northern Alberta is gradually resumed. In the last month of the quarter, GDP rose 0.6%, offsetting an equivalent decrease in may, compared with expectations of increasing 0.4%. Mining, quarrying, and oil and gas extraction, manufacturing and utilities were the main factors contributing to the increase for the month. Output in the service sector rose for the ninth straight month, rising 0.2% in June. Gains were posted in public sector, transportation and warehousing services, and financial and insurance sectors. Retail trade recorded the most significant decrease in production volumes.
The pound strengthened against the US dollar, returning to session high, despite the apparent lack of a catalyst. Most likely, investors adjust positions ahead of tomorrow’s publication of the PMI index for the manufacturing sector in the UK. Market participants believe that it will clarify how much impact the results of the referendum on producers. It is expected that the PMI will rise, but will remain on-site reduction.
Earlier today it became known that housing prices in the country are stable, and consumer sentiment improved. Recall, Nationwide Building Society reported that UK housing prices increased at the fastest pace in five months in August. Housing prices rose 5.6 percent year-on-year in August, after rising 5.2 percent in July. It was the fastest growth over the past five months. Economists had forecast that annual growth will slow to 4.8 percent. On a monthly basis, housing prices rose 0.6 percent, slightly faster than the growth of 0.5 percent a month ago.
At the same time, consumer confidence index GfK in the UK in August rose to -7 from -12 in July. However, consumer confidence remains weaker than before the referendum, when the index was -1. According to economists, UK consumers as a whole benefit from such factors as high employment and income growth. In addition, improved confidence and contributed to other factors such as good weather.
The U.S. dollar fell against the Euro, losing the all previously earned the position today that was caused by partial profit-taking and correction positions in anticipation of Friday’s report on the labor market. A further drop of American currency keep today’s U.S. data, which reinforce the arguments in favor of the fed raising interest rates this year. The ADP report showed that in August the number of employed increased by 177 thousand, after rising by 194 thousand in July (revised from +179 thousand). Analysts had expected an increase of 175 thousand we will Remind, data from ADP ahead of an official report on the labor market for 2 days, so investors use them as a reference for basic statistics. Overall, data from ADP suggests that Friday’s report will be strong. It is projected that the number of people employed in non-agricultural sectors increased by 180 thousand after increasing by 255 thousand in July.
Meanwhile, the national Association of realtors reported that the index of pending home sales increased 1.3 percent to 111.3, finishing in second place for ten years. Economists had forecast an increase of 0.6 percent. The demand for housing is currently defined by the labour market, which continues to generate job growth as it approaches full employment. Information about housing prices, residential construction, new home sales and the confidence of homebuilders were optimistic in recent months.