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The Loonie continues melting lower amid fresh tariffs on China

CAD - Canadian Dollar

The Loonie fell versus the Greenback yesterday, even though the data in the U.S. was weak. Construction spending came in at -1.3 percent versus the 0.3 percent expected, which led to a 0.2 downward revision to the U.S. GDP in the second quarter. However, the move started before the data in what looks like the market second-guessing Fed Powell's view of "only" a mid-cycle adjustment as global growth remains weak and trade tensions continue.

On the release side today, according to Statistics Canada, Canada's exports were down 5.1 percent in June, while imports fell 4.3 percent, both due in part to significant decreases in crude oil, as well as aircraft and other transportation equipment and parts. As a result, Canada's merchandise trade balance remained in a surplus position, settling at $136 million after posting a $556 million surplus in May.

This morning the USD/CAD rises around 0.3 percent (weaker Loonie) following a Trump's tweet that he is putting 10 percent tariffs on $ 300 billion of Chinese imports that aren't yet subject to U.S. duties starting on September 1st. This was due to China not buying U.S. agricultural products and not stopping the sale of Fentanyl to the U.S.

Key Movers

According to Bloomberg; Boris Johnson's House of Commons majority was cut to just one after the anti-Brexit Liberal Democrats won a by-election in Brecon and Radnorshire, making his balancing act more difficult as he seeks to deliver Brexit by October 31st. The GBP/USD pair is trading flat this morning.

China pledged to retaliate if President Trump piles extra tariffs on its imports, but gave no details. Its response is complicated by the fact that the country's leadership is probably heading off this week for its annual two-week policy enclave, in which Xi Jinping and other officials disappear from public view.

Expected Ranges

USD/CAD: 1.3219 - 1.3312 ▲

EUR/CAD: 1.4670 - 1.4723 ▲

GBP/CAD: 1.6011 - 1.6093 ▲

AUD/CAD: 0.8969 - 0.9060 ▲

NZD/CAD: 0.8628 - 0.8681 ▼