S&P 500 — US Large Cap Index
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TSX Composite — Canada Index
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Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- USD/CAD depreciates as rising crude prices provide support for the Canadian Dollar.
- Renewed Middle East tensions heighten oil supply risks despite an Iran-Oman shipping agreement through the Hormuz.
- Weak ADP payrolls and steady services growth shift investor focus to upcoming Nonfarm Payrolls.
USD/CAD loses ground for the second successive day, trading around 1.4010 during the European hours on Thursday. The pair remains under pressure as the commodity-linked Canadian Dollar (CAD) draws support from rebounding crude oil prices, a crucial factor given Canada’s position as a major oil exporter. Following three consecutive days of losses, West Texas Intermediate (WTI) crude recovered to trade near $74.90 per barrel. Prices were bolstered by renewed supply concerns following a deadly Israeli airstrike in southern Lebanon targeting Hezbollah infrastructure over reported ceasefire violations.
Meanwhile, market participants are weighing geopolitical developments against potential supply additions, particularly reports of a new maritime agreement between Iran and Oman. The two nations are finalizing a joint statement regarding a temporary two-to-four-month shipping route through the Strait of Hormuz. While Tehran clarified that this measure does not signal a full reopening of the strategic waterway, the prospect of increased Middle Eastern energy flows has somewhat tempered market fears of severe supply disruptions.
On the macroeconomic front, US economic data presented a mixed picture. ADP private-sector payrolls increased by just 44,000 in July, falling sharply from June’s revised figure of 95,000 and missing expectations of 70,000. On the other hand, the ISM Services PMI pointed to steady economic momentum, edging up to 54.1 from 54.0 in June, though it slightly lagged the forecasted 54.5. Investor focus now shifts to upcoming key catalysts, notably Thursday’s Initial Jobless Claims and Friday’s pivotal Nonfarm Payrolls (NFP) report.
US data mix points to mild downside risks for payrolls
ING’s FX team highlights a softer tone in the latest US data ahead of Friday’s payrolls. Analysts note that “ADP payrolls came in a bit soft at 44k and ISM services rose less than expected to 54.1 yesterday,” with particular concern around the labour market signal from the survey. They point out that “the services employment subindex plummeted to 47.5, which – according to our macro team – points to some mild downside risks for tomorrow’s payrolls,” reinforcing the case for a cautious market stance going into the release.
