The Canadian dollar rose 0.14 percent on Friday to cap a volatile week that left the loonie back where it started on Monday. The Canadian currency was pressured downward by rising trade-war concerns, but as the week went by some of the anxiety went down, sapping the momentum out of the U.S. dollar.
The loonie was able to brush off a larger-than-expected number of job losses (24,200) and a higher unemployment rate (5.7 percent) and is trading at 1.3206, slightly higher than the start of the Asian session on Monday.
Next week in the Canadian economic calendar will be quiet with only the ADP payroll data and foreign securities purchases on Thursday and Friday respectively. U.S. inflation and the ongoing saga of trade headlines will guide the market as the prolonged trade dispute between China and the United States has put the loonie under pressure.
OIL – Oil Rises On Friday On Softer Dollar And Saudi Cut Expectations
Oil prices rose on Friday despite a lower demand growth forecast by the IEA as a drawdown in European inventories, a softer dollar and expectations of OPEC making a move to stabilize crude pricing. Despite the rebound, energy prices were under pressure all week long.
Oil continues to be sensitive to trade-war rhetoric. A surprise buildup in the United States added extra pressure to crude prices. Saudi Arabia is willing to do more to prevent a free fall, but hard to imagine what that would look like. The prolonged trade war has been a negative factor for global growth estimates.
The lower the estimates, the less energy demand that is forecasted, putting downward pressure on oil. Weather (Hurricane Barry) and geopolitical (Iran vs. U.S.) has added some support to crude prices but going forward, ample supply and strong dollar prices could drive it lower.
The OPEC+ extended its production agreement in July, but with a worse trade scenario, the group has a lot to do discuss but little in the way of actual actions the group could take to keep oil from falling further.
GOLD – Gold Rises On Safe-Haven Flows
Gold was on its way to a 3.9 percent gain on the week. The yellow metal has risen as investors are seeking a safe haven due to geopolitical anxiety as Brexit, U.S.-China trade war and Italian elections loom over the global economy.
Gold was up 0.35 percent on Friday and is once again trading above the $1,500 price level.
Central banks around the globe are preparing to keep rates lower and dovish rhetoric continues to be the norm. Monetary policy makers have gotten out of the metal’s way as three CBs slashed rates this week. The Fed could follow suit in September with a 25 basis points cut.
Trade uncertainty remains high despite the Trump administration walking back some aggressive comments, but with a September 1 deadline for higher tariffs on consumer-facing Chinese goods, the yellow metal will continue to be bid.
STOCKS – U.S.-China Trade War Keeping Equities Under Pressure
Stocks had a volatile end of the week having to digest trade comments from U.S. President Donald Trump and geopolitical risk rising in the Asian and European sessions. Overall, the stock market rebounded this week as China – although defiant in matching the U.S. tariffs – has kept the yuan under close watch to avoid triggering a currency war.
Investor confidence has wavered as the U.S.-China trade dispute has ramped up, but global central banks have cut rates and keep signaling further cuts to avoid the global economy falling into a recession.
Headwinds remain strong as a deal in the short term between the U.S. and China is a long shot and that is what the Friday trading session reflected.
Equities remain sensitive to trade headlines even as some of the initial shock of last week’s announcement of a new offensive to be launched on September 1.