The U.S. Federal Reserve has not offered any guidance on their next monetary policy move and continues its dependancy on data.
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As usual, the “Loonie” Dollar reflected the movements in the prices of oil, Canada’s most lucrative commodity. Stocks have been setting records recently, but it’s been more than a week since they rose for two consecutive days.
Dow Jones closed down by 0.45 percent, S&P 500 ended down by 0.55 percent, Nasdaq finished the day down by 0.65 percent.
The Labor Department said prices paid by consumers were unchanged in July as gas and other energy prices kept inflation down. Two weeks ago, the BoE cut interest rates to record lows and announced a bond buying programme with analysts expecting slowing activity, after Britain’s vote to leave the European Union, likely to drive the central bank to ease policy further in coming months. Overall, inflation is up just 0.8 percent over the past year.
IG market analyst Joshua Mahony said: “Interestingly, on the day when the Fed’s Dudley has sought to raise market expectations of a rate rise in September, we have also seen the dollar lose ground across the board, with markets largely disregarding the notion that a hike will come next month”.
Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate began to fluctuate on Tuesday as investors took a break from the Canadian Dollar’s recent rally to sell the currency from its highs.
In contrast, oil prices gained on a weaker dollar, with West Texas Intermediate crude up 1.7% to $46.57 a barrel and Brent 1.7% firmer at $49.20. Brent crude, a benchmark used to price global oils, rose 61 cents, or 1.3 percent, to $48.96 a barrel in London. Oil prices climbed last week after steep losses in June and July.
Kinder Morgan rose 52 cents, or 2.4 percent, to $21.82 and Apache added $1.44, or 2.9 percent, to $51.32. Spot gold was up about 0.7 percent at $1,348.86 an ounce.
The two-year yield, which is sensitive to traders’ views on Fed policy, was up 2 basis points at 0.750 percent after touching a near three-week peak at 0.758 percent.
On the other hand, the price of medical services rose 0.5% and prescription drug prices increased 0.9% in July compared to last month.
The central bank raised interest rates from near zero in December a year ago, its first monetary policy tightening in almost a decade, but it has since kept its policy rate unchanged amid financial market volatility and stalled economic growth. “The Fed wants to give China and emerging markets time to heal and get their houses in order”. The stock tumbled $13.71, or 25.7 percent, to $39.69. G&K Services advanced $14.57, or 17.7 percent, to $96.70 and Cintas stock gained $5.57, or 5.2 percent, to $112.99. Coty said it is “premature” to comment on how the combined business will do. Home Depot stock gained $1.44, or 1.1 percent, to $138.50.
The US share market’s resilience is even more remarkable given that US company profits, which have already recorded five straight quarters of year-over-year declines, are expected to shrink again in the next reporting season.
AIG DEAL: Insurer American International Group said it will sell its United Guaranty mortgage insurance unit to Arch Capital for $3.4 billion in cash and stock. The metal is 27 per cent higher this year. Its stock dipped 5 cents to $59.17.
Those risks might not be as diminished as even with strong back to back employment reports the USA economy has not been able to create inflation and it is worrisome that consumers are reducing purchases despite low prices. It was the strongest pace of new home starts since February.
Dick’s Sporting Goods announced better-than-expected quarterly results and raised its projections for the year. Factory output rose 0.5 percent.
Yields on two-year notes briefly touched a near three-week high of 0.758 per cent but failed to reach the July peak of 0.778 per cent and were last at 0.750 per cent.
OTHER ENERGY TRADING: Wholesale gasoline rose 2 cents to $1.42 a gallon.
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OVERSEAS: Britain’s FTSE 100 fell 0.4 percent and the CAC 40 in France shed 0.5 percent. It was last trading at 94.96, down 0.8 percent on the week. Apache Corp. added $1.09, or 2.2 percent, to $50.97.
