Daily Financial Markets Update: Oil Prices Fall on Alberta Forest Fires


The Canadian dollar was the weakest performer in the forex arena, as the forest fires in oil-rich Alberta led to the evacuation of several oil industry employees and the closure of some oil mining and production operations in the area. Canada’s trade deficit widened from 2.5 billion CAD to 3.4 billion CAD in March instead of narrowing to the estimated 1.4 billion CAD shortfall.

USDCAD rallied to a high of 1.2885, CADJPY broke below support at 84.00 and is down to 83.50, EURCAD popped up to the 1.4750 minor psychological level, and GBPCAD is up to 1.8640.

In other oil-related news, US crude oil inventories rose 2.8 million barrels versus the projected gain of 0.6 million barrels, reviving fears of an oversupply. WTI crude oil dipped below the $44/barrel while Brent crude oil retreated to a low of $44.17/barrel.

Greenback holds on to gains despite mixed data

Economic reports from the US came in mixed, with the ADP non-farm employment change reading falling far short of estimates. The report showed a 156K gain in hiring, much lower than the estimated 205K gain and the previous 194K increase. This sets the tone for a potential NFP disappointment on Friday, as the report is estimated to show a slower 203K rise and might remind traders that the Fed isn’t likely to hike in June.

Meanwhile, the ISM non-manufacturing PMI turned out better than expected as it rose from 54.5 to 55.7, outpacing the consensus at 54.7. Preliminary non-farm productivity sank 1.0% while unit labor costs rose 4.1% in the first quarter, indicating upside pressure on wage growth.

EURUSD held steady below the 1.1500 major psychological support, GBPUSD bounced off 1.4500 to 1.4520, USDJPY climbed back above 107.00 before consolidating, and USDCHF is up to .9582. For today, only the initial jobless claims data is lined up.

UK services PMI to dictate GBP direction

The pound has also been slightly weaker against most of its peers, as the currency is being more sensitive to UK data. Earlier in the week, the manufacturing PMI missed expectations while yesterday’s construction PMI showed a decline from 54.2 to 52.0 to show a slower pace of growth in the industry.

Today has the services PMI due and a dip from 53.7 to 53.6 is eyed. European banks are closed in observance of Ascension Day today so this lower liquidity could spur stronger volatility in the London trading session.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.