The Canadian dollar edged lower in early New York deals on Tuesday as crude oil, Canada’s biggest export, is approaching $94 per barrel as traders fret over demand growth amid global economic concerns.
Light Sweet Crude Oil (WTI) futures for September delivery were down $0.63 to $94.26 a barrel on demand concerns as slowdown in global manufacturing activity overshadowed the approval of a debt deal by the U.S. lawmakers. Yesterday, oil ended below $95 as the dollar firmed against the euro and traders expressed concerns about demand for energy supplies.
The Canadian dollar reached 0.9621 against the US dollar around 8:30 am ET Tuesday, the lowest level since July 18. The USD/CAD is now staying exactly at the 30-day simple moving average level and is targeting the 50-day SMA at 0.9670 on the upside. The pair is presently quoted at 0.9608.
Personal income for U.S. workers continued to grow in June, according to figures released by the Commerce Department, though the rate of increase slowed to a level lower than most economists had predicted.
According to the report personal incomes rose $18.7 billion in June, or 0.1 percent, slower than revised figures for May that showed a 0.2 percent increase. Most economists had predicted a somewhat higher, 0.2 percent, increase in personal income for the month.
Although incomes grew slightly, consumer spending, as measured by the Commerce Department’s estimate of personal consumer expenditures, decreased by $21.9 billion or 0.2 percent. Most economists had predicted a slightly, 0.1 percent, growth in consumer spending, putting the actual figures below forecasts.
The Canadian dollar reached as low as 80.42 against the yen before holding steady around 8:30 am ET. On the downside, the loonie may test support around the 79.60 level. The loonie-yen pair is presently trading at 80.50.
Average labor cash earnings in Japan declined unexpectedly in June, data from the Ministry of Health, Labor and Welfare showed today. The total nominal average monthly cash earnings per regular employee fell 0.8 percent year-on-year in June after a 1 percent increase in the previous month. Economists expected a 0.5 percent gain.
Erasing its Asian session gains, the Canadian dollar depreciated almost 0.6 percent to reach as low as 1.3637 around 8:40 am ET from a 4-day high of 1.3553 hit in early European deals. If the loonie weakens further, it may find target around the 1.3750 level, ie, the 30-day SMA for the EUR/CAD pair.
The euro lost ground in the previous session on worries about the debt crisis spreading to larger euro zone countries like Italy and Spain. Significant cuts in government spending in the U.S. could have an adverse impact on global recovery also weighed heavily in the market.
The eurozone producer price inflation eased to 5.9 percent in June, in line with expectations, from 6.2 percent in May, Eurostat said today. On a monthly basis, industrial producer prices remained flat in June, following a 0.2 percent drop in the previous month. Economists were expecting a 0.1 percent rise for June.
Looking ahead, the API will release its report on U.S. crude oil inventories for the week ended July 29 after the trading hours today. Analysts expect crude oil inventories pile up by 1.20 million barrels last week.