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The Loonie trades flat pending the release of CPI numbers this Wednesday

CAD - Canadian Dollar

The USD/CAD trades flat compared with last week’s close at 1.3032. The Canadian dollar was the best performer of the major currencies last week. The Loonie rallied despite the BoC holding their cash rate unchanged at 1.75 percent and despite keeping a dovish tone. The BoC made a gloomy assessment of the economy's near-term prospects and said that recent Canadian economic strength is ambiguous.

On the release side, early today, existing home sales came in at 0.2 percent versus the expected number of 0.1 percent, without moving a needle in the Loonie. Crude oil prices are also supporting the Loonie price action after a strong week last week after a storm shut down a massive proportion of Gulf of Mexico crude production. This is the case even as lingering demand concerns continue to dent the outlook.

Technically speaking, the USD/CAD trades in a short term downtrend and the next levels to be reached are 1.3015, 1.3000, and 1.2960. However, if the USD/CAD pair bounces, it might test the 1.3049, 1.3062, and 1.3093 levels. In the long-term, the USD/CAD is still within an uptrend that comes from September 2017; once the 1.2900 level is broken, it will be a confirmation of a change of trend to the downside.

Key Movers

In the U.K. Boris Johnson will come up against problems from political heavyweights if he attempts to suspend the U.K. Parliament to force through a no-deal Brexit. Johnson has refused to rule out postponing Parliament to fulfill his pledge to take the U.K. out the European Union, causing a wave of reactions across the political divide from those who say they are worried about upholding 'Britain's constitution. The Cable falls over 0.3 percent this morning, and the GBP/NZD pair falls even further 0.70 percent.

While China's GDP slowed in the second quarter 6.2 percent, the weakest pace in 27 years, the data showed factory output and retail sales both exceeded analysts' estimates for June. Signs of stabilization are starting to emerge in the monthly indicators for China. This latest economic data shows the slowdown remains intact, and market participants should expect further stimulus from China's central bank this year. The asset manager Pimco said that market participants should be worried about the risk of a full-blown currency war where major central banks intentionally reduce the strength of their currencies.

SocGen joins in the growing chorus of those expecting the ECB to cut its deposit rate facility in September. The firm's economist, Anatoli Annenkov, now assumes that the ECB will cut its deposit rate by ten bps in September after introducing a "downward bias" to its forward guidance. The EUR/USD pair trades flat at 1.1267 this morning.

Expected Ranges

USD/CAD: 1.3015 - 1.3060 ▲

EUR/CAD: 1.4655 - 1.4735 ▲

GBP/CAD: 1.6315 - 1.6441 ▼

AUD/CAD: 0.9134 - 0.9196 ▲

NZD/CAD: 0.8726 - 0.8785 ▲