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Bank of Canada Interest Rate Decision on Wednesday.

CAD - Canadian Dollar

Canadian data continues to be a bright spot in the global economy with their trade balance data showing a C$5.95bn surplus with the U.S, the largest since 2008. The Loonie managed to reach an 8-month high versus USD early last week even as the price of oil, a major export of Canada and driver of CAD strength, retreated. The Bank of Canada is to meet this week to make its interest rate decision and revise its growth forecasts for the economy.
Expectations of an interest rate cut in the U.S later this month were diminished last week by a surprisingly strong job report, showing the U.S economy added 224k jobs in June (versus +160k expected). May saw a figure of only 72k jobs added which had led to the cemented view that there would be a July rate cut from the Fed. Last Friday’s numbers have added doubt to that view and futures markets now show that traders see a 70% chance of a rate cut in July, down from 90%.

Key Movers

The head of the Bank of England, Mark Carney, delivered a blow to the world’s major economies last week. He stated global trade tensions have led to a ‘sea change’ in investors' outlook for the world economy. The shift in market expectations of interest rates worldwide, particularly in the U.S., where up to four rate cuts are conceivable by the end of 2020, “suggests a shock to the U.S. and Chinese business confidence and investment analogous to what has happened in the U.K..” His comments also led to investors increasing bets on a BoE rate cut later this year.

Expected Ranges

USD/CAD: 1.3048 - 1.3083 ▼

EUR/CAD: 1.4637 - 1.4698 ▼

GBP/CAD: 1.6328 - 1.6394 ▼

AUD/CAD: 0.9111 - 0.9142 ▲

NZD/CAD: 0.8660 - 0.8693 ▲

EUR/USD: 1.1212 - 1.1234 ▼