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Reviewing the Canadian Data ahead of Friday's Gross Domestic Products

CAD - Canadian Dollar

The economic data in Canada continues to strengthen, but crude oil and the risk-off mode did not help the Loonie. It only appreciated 0.1 percent against the U.S. dollar by the end of last week. Core retail sales came in at 0.9 percent, which was better than the -0.1 percent expected. Wholesale sales rose 0.6 percent to $ 64.1 billion in June, while the expectation was for -0.2 percent. Finally, the CPI in Canada rose 2 percent on a year over year basis in July, matching the increase in June. Most importantly, prices soared year over year in all eight major components. On a seasonally adjusted monthly basis, the CPI increased 0.4 percent in July, following a 0.1 percent decline in June.

The Canadian dollar continues to trade in its two-week trend channel of 1.3250 to 1.3350 against its USD counterpart. Market participants expect the range to hold heading into Friday GDP figures. The Loonie finds support against the greenback at 1.3289(0.7525) and 1.3245(0.7550), while resistance is 1.3333(0.7500) and 1.3377(0.7475).

Key Movers

Federal Reserve Chair Powell’s speech was neutral as he did an excellent job of threading the needle between the hawks and the doves. A key stake away from Powell on behalf of the Fed was, ""it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion."" A neutral speech wasn’t enough to stop the market from continuing its selloff. The risk selloff only accelerated after Trump’s tweet, where he criticized the Fed for not cutting rates sooner. Calling the Fed Chair Jerome Powell and China’s President Xi enemies and ordering American companies to start looking for alternatives to dealing with China. Late Friday, after the market close, Trump announced tariff increases from 25 percent to 30 percent on $250B of imports from October 1, and from 10 percent to 15 percent on remaining $300B from September 1. U.S. equity markets closed around 3 percent down on Friday, with safe-haven currencies such as the Japanese Yen and Swiss Franc all rallying against E.M. currencies.

Expected Ranges

USD/CAD: 1.3274 - 1.3321 ▲

EUR/CAD: 1.4759 - 1.4866 ▼

GBP/CAD: 1.6254 - 1.6353 ▼

AUD/CAD: 0.8904 - 0.9114 ▲

NZD/CAD: 0.8435 - 0.8510 ▲

EUR/USD: 1.1105 - 1.1167 ▼