USD/CAD - Loonie Still Outperforms

The Canadian dollar gained half a cent against the U.S. dollar yesterday after the U.S. Federal Open Market Committee released its statement to the market. The loonie continues to outperform after an interest rate hike this month. There is an accommodative silence between the Bank of Canada and the Liberal government. Prime Minister Trudeau and Finance Minister Bill Morneau are concerned that BOC Governor Stephen Poloz has moved too quickly on raising interest rates, but it is customary to stay out of each other's business. Canadian household debt is at all-time highs, and Trudeau's government may find itself tightening up on spending, as borrowing costs go up. The Canadian economy has relied upon consumer spending for economic recovery and growth since the 2008-09 financial crisis.

In the FOMC statement yesterday, the central bank said it would remain accommodative on monetary policy and continue to monitor labour conditions and inflation. The Fed's objectives are full employment and a 2% inflation target. Inflation is expected to remain under target for some time and any chance of a rate hike this year was ruled out by investors; as a result, the greenback fell against its currency counterparts. The Committee statement also read that the Fed would maintain its policy of reinvesting in sovereign debt and rolling over of maturing treasures. The Fed also said it would start the normalization of its balance sheet program relatively soon. Durable Goods Orders on deck today along with weekly Initial Jobless Claims. Expectations on Durable Goods Orders were for 3.9%, and orders soared to 6.5%, Initial Jobless Claims came in at 244,000. Forecasts were for 241,000 while previous was 234,000.

Experts expect a range today of $1.2412 to $1.2533

The German fundamentals continue to release this week, as its Consumer Confidence Survey in August printed better than expected at 10.8. Some more hawkish comments from the European Central Bank yesterday, as National Bank of Austria Governor Ewald Nowotny mentioned that even though inflation was still low, policy setting should be evaluated as there is no more risk of deflation. The ECB is expected to begin winding down Quantitative Easing after the summer. The euro is currently trading at $1.4597.

Commentators expect a range today of $1.4524 to $1.4638

No significant event risk is expected out of the U.K. until this evening when Consumer Confidence in July releases, which is forecast for -11. Confederation of British Industries Realized Sales, a second-tier set of data, printed better than expected at 22. News has been reported that another one of Prime Minister Theresa May’s team, her chief political strategist, has left. The pound sterling is currently trading at $1.6407.

Those in the know expect a range today of $1.6342 to $1.6447

On Wednesday, the Australia fell on the back weak Australian Consumer Price Index figures. The Aussie, however, was able to reverse the losses and surge above the key resistance level during the Asian trading session overnight following the less hawkish FOMC statement. Firmer commodity, especially in iron ore and copper, also helped to give the Aussie a boost. The Australian-U.S. dollar pairing tested a new high just above $0.8060 before trading back lower towards the 0.8000 level in the North American trading session this morning. Tonight, investors will get Australian Producer Price Index data at 9:30 p.m. EDT.

Oil (WTI): $48.74 U.S. per barrel

Gold: $1,263.12 U.S. per ounce

Silver: $16.80 U.S. per ounce

Copper: $2.88844 U.S. per tonne

Dollar Index: 93.74

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