USD/CAD - Loonie Recovers

The Canadian dollar this morning is recovering from losses it sustained this week against its G10 counterparts. With falling commodity prices in metals and energy (barring gasoline due to refinery shut down in Hurricane Harvey's path) the Canadian dollar lost well over 2% and significant ground on the greenback this week. This morning with the release of Q2 Gross Domestic Product quarter on quarter annualized increased to 4.5% while forecast was for 3.7%, a significant jump in growth while Q2 GDP q/q rose to 1.1 versus previous of 0.9%.

Canadian GDP for June decreased to 0.3% from last of 0.6% yet better than the forecast of 0.1%. Our attention turns back to the Bank of Canada's rhetoric back in June on raising interest rates back to pre-oil glut crisis level of 1%. BOC next interest rate announcement is next Wednesday, September 6; most economist believe if the BOC is to move on policy is would be at October meeting. The GDP figures today give the BOC the fuel to move on guidance.

Personal Consumption Expenditure for the US combined with a Federal Reserve-favoured gauge for inflation readings adds to investor’s views that the Fed will hold policy unchanged longer. Personal income and spending for July were mixed with income above expectations at 0.4% and spending below forecast posting 0.3%. Weekly Initial Jobless and Continuing Claims both printed better than forecasts.

Tomorrow's employment release is lining up to be a good print with early indicators having exceeded expectations. The change in Non-farm Payrolls is forecast at 180,000, and the unemployment rate is anticipated to remain at 4.3% on Friday's 8:30 a.m. ET release of these fundamentals.

Expectations remain low for the European Central Bank to announce a significant change in policy next week. Euro-area consumer prices rose to their highest level in four months with a reading of 1.5% for August. Furthermore, the German unemployment rate fell further, and the jobless rate remained at 5.7%. The euro has reversed its gains this week against the U.S. dollar even on the good data, showing investors that with geopolitical tensions early in the week the euro could be looked at more as a haven currency.

The sterling remains soft today as it tests the low of the week. Data from the U.K. this week was widely mixed. Combined with ongoing uncertainty over the Brexit process, the pound should be kept under pressure and biased to the downside.

The Australian dollar is trading lower this morning despite positive domestic data and Chinese data. Australian Private Capital Expenditure increased 0.8%, beating the forecast of 0.2%. Chinese Manufacturing Purchasing Managers Index also came in slightly better than expected at 51.7, which is up from the previous figure of 51.4.

Oil (WTI): $46.33 U.S. per barrel

Gold: $1,309.69 U.S. per ounce

Silver: $17.40 U.S. per ounce

Copper: $309.60 U.S. per tonne

Dollar Index: 93.17

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