USD/CAD - Loonie at Multi-Month High

The Canadian dollar has hit a multi-month high. Bank of Canada Governor Stephen Poloz appeared on CNBC overnight, and said the current interest rate level is "extraordinarily low" and suggests the need to absorb steadily the excess capacity. Expectations of a rate hike have increased to 40%. Risk for the loonie is on the upside as investors headed into Poloz’s panel speech this morning at 9:30 am EDT and Deputy Governor Lynn Patterson’s speech at 2:20 pm EDT.

The U.S. dollar is trading broadly lower against its G10 counter parts today. Headlines of stalled health-care reform from the U.S. are dampening market sentiment. Furthermore, central banks around the world are also having an impact as policymakers outside the U.S. signal a start to tightening policy settings. Global equities are generally lower while commodities are trading higher. Focus will continue to be on the central banks and interest rate outlook with European Central Bank President Mario Draghi speaking this morning and BoC DG Patterson later on this afternoon.

Traders expect a range today of $1.3049 to $1.3245 for the U.S-Canada-dollar pairing.

Draghi has just added fuel to the fire and the euro is on the move. He hinted at a speech yesterday that the ECB might start tightening policy by tapering Quantitative Easing or adjusting its policy tools of sub-zero interest rates. The euro surged on the back of these comments and Draghi will have the opportunity today to backpedal or confirm yesterday’s statement at the ECB Forum. The euro has retraced since yesterday’s news and is currently trading at $1.4842.

Investors expect a range today of $1.4801 to $1.4948

U.K. House Prices are on the rise as Nationwide reported a higher-than-expected increase in June, releasing at 1.1% m/m and 3.1% y/y. This was the highest reading since May of last year. All eyes will be shifting towards the Policy Panel at the ECB Forum where Bank of England Mark Carney will be speaking. The pound sterling is currently trading at $1.6787.

Experts expect a range today of $1.6865 to $1.6996

Former Reserve Bank of Australia board member John Edwards sent an eerie message to homeowners stating that he expected interest rates to increase by 2% in the next two years. That would make eight rate hikes in a short period of time! The Australian dollar is currently trading at $0.9975.

Oil (WTI): $44.20 U.S. per barrel

Gold: $1,250.02 U.S. per ounce

Silver: $16.72 U.S. per ounce

Copper: $2.6402 U.S. per tonne

Dollar Index: 96.25

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