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The Loonie is being pressured by Fed Rosengren’s comments and it awaits the release of inflation numbers tomorrow

CAD - Canadian Dollar

The USD/CAD has traded within a very well defined range over the last week, which is a prelude of a wider move. Even looking back, we can see that the USD/CAD pair has been testing the same resistance levels since August 7th (at around 1.334ish), and it tested important supports between 1.3200 and 1.3215 on August 11th and 13th respectively. The economic data release today made the Loonie appreciate for few minutes because manufacturing sales fell 1.2 percent to $58.0 billion in June, following a 1.6 percent increase in May. This was better than the expectation for -1.8 percent.

Crude oil, at this moment, is trading flat amid a moment of peace between the U.S and China on the trade war front. The most critical news though came from the U.S. and kept a bid on the USD/CAD pair (weaker Loonie). Eric Rosengren, President of the Federal Reserve Bank of Boston, continued to push back against further interest-rate cuts by the Fed, arguing he's not convinced that slowing trade and global growth will significantly depress the U.S. economy. He said, "…we're likely to have a second half of the year that's much closer to 2 percent growth." He added, "I'm not saying there are no circumstances in which I'd be willing to ease. I just want to see evidence we are going into something that is more a slowdown." Rosengren, a voter this year on the Federal Open Market Committee, was one of two officials who dissented when the panel cut rates on July 31st. Two days later he released a statement saying he did not see a "compelling case" for adding additional monetary accommodation, while also raising concerns that a cut would add to financial stability risks.

The USD/CAD pair moved from 1.3251 to 1.3337 in 10 hours. The most critical driver of that move came from Rosengren. On the flip side, the strong performance of crude oil could not stop appreciation of the USD/CAD.

Key Movers

Market participants are looking for direction when central banks gather at the annual Jackson Hole symposium this week. However the expectations are increasing, and it might be disappointing regarding how much information market participants can obtain from this symposium, because the conversations around the coffee machines are probably the ones that need to be heard, but they are not public.

The Euro pairs are weakening after ECB's Madis Muller said that, “…the near-term outlook for the bloc was even more pessimistic than the data, thanks to "political uncertainty linked mainly to potential trade restrictions and Brexit."

Expected Ranges

USD/CAD: 1.3310 - 1.3350 ▼

EUR/CAD: 1.4750 - 1.4795 ▲

GBP/CAD: 1.6100 - 1.6230 ▲

AUD/CAD: 0.9013 - 0.9060 ▲

NZD/CAD: 0.8498 - 0.8574 ▲