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Market Participants Focus on the U.S. Federal Reserve this Week.

CAD - Canadian Dollar

The focus this week in FX markets turns its attention to central bankers. The US Federal Open Market Committee (FOMC) meeting, Bank of England, and Bank of Japan all scheduled in the next five days. Therefore the Canadian dollar will trade on the ebb and flows of the needs of the market. At the FOMC meeting on Wednesday, the market is expecting the Fed to cut rates by 25 basis points while the market is expecting both BoE and the BOJ to remain on hold. Market participants saw positive economic data from the US this month with a good employment print at the beginning and finishing with a higher Q2 GDP last week. Both fundamentals should argue against rate cuts, but the market continues to price in a 25 bp cut down from the expected 50 bps seen at the end of June. Of interest, the US Jobs number for July will be released on Friday, August 2nd and will shed some light on whether the FOMC made the correct decision. Crude Oil moves higher on the day as constructive Iranian nuclear talks between Germany, Britain, France, China, and Russia. Iran requested that the Europeans find ways to shield its economy fro US sanctions, or it will withdraw from the agreement itself.

Key Movers

Brexit is still holding all the headlines as new Prime Minister Boris Johnson has stated he is fully committed to a ‘no deal’ Brexit and intends to deliver it by the 31st of October by “any means necessary.” The pound will also see further movements with the Bank of England (BOE) rate meeting this Thursday, where the expectation is that the committee will vote to maintain the Bank rate at 0.75%.

On the trade front, US Trade Representative Lightziger and US Treasury Secretary Mnuchin will travel to China this upcoming week to continue negotiations with China. Trump has reported that China may hold off on agreeing to a deal until after the election next year.

US employment data is also scheduled to be released late Friday night. The Non-Farm Employment Change and Unemployment Rate show the figures for employed and unemployed people during the previous month and is a substantial driver for the USD.

Expected Ranges

USD/CAD: 1.3148 - 1.3184 ▲

EUR/CAD: 1.4622 - 1.4675 ▼

GBP/CAD: 1.6108 - 1.6325 ▼

AUD/CAD: 0.9080 - 0.9113 ▼

NZD/CAD: 0.8705 - 0.8747 ▼

EUR/USD: 1.1112 - 1.1139 ▼