USD/CAD - BoC Governor Dampens Rate Hike Expectations

The Canadian dollar fell against its G10 trading peers yesterday after comments from Bank of Canada Deputy Governor Timothy Lane. Lane said that the BoC is monitoring how the Canadian economy manages higher borrowing costs, due to the two recent rate hikes, and paying close attention to the strength of the loonie. These comments had investors questioning the current probability of a future interest rate increase next month and for December. The Canadian economy has been the fastest-growing one against its trading peers and the flattest yield curve citing inflationary pressure is next to non-existent.

Today, the U.S. Federal Open Market Committee meeting begins and it will finish tomorrow at 2 p.m. ET with an interest rate announcement. The market is not expecting a rate move but will be focused on the Fed's plan on how it will shrink its $4.5-trillion balance sheet. This morning, Building Permits and Housing Starts were released, and permits were higher at 5.7% from forecasts of -0.8%, while starts missed at -0.8% with a consensus of 1.7%. President Trump will have the world stage today, as he addresses the United Nations and he will be calling on world leaders to align views on how to confront Iran and North Korea, which is the biggest threats to global security.

Experts expect a range today of $1.2218 to $1.2336

Economic Sentiment in September for the euro-zone and Germany rose from previous reading and printed at 31.7 and 17.0 respectively; however, only German’s outlook was above expectations. euro-zone Current Account in July exceeded expectations of 22.3 billion and printed at 25.1 billion. The euro was strong early this morning until it retraced some of its gains after headlines have suggested that European Central Bank may not taper. The euro is still trading at $1.4704.

Observers expect a range today of $1.4678 to $1.4770

Bank of England Mark Carney spoke at the meeting of the International Monetary Fund yesterday, and his comments did not come across as hawkish as the market expected when it came to a rate hike in November. There is no event risk out of the U.K. this morning leaving the Pound to trade on broader sentiments. The pound sterling is currently flat from yesterday’s low and trading at $1.6595.

Market watchers expect a range today of $1.6546 to $1.6660

The Australian dollar traded in the positive territories during the Asian trading session last night and recovers part of yesterday’s loss. The commodity currency got a boost after domestic house price index came in better than expected at 1.9% for the second quarter. Last night’s RBA minute was largely a non-event as the minutes revealed a neutral tone with the central bank’s steady policy views for some time. The minutes also reiterated the need to balance the risk of high household debt against low inflation.

Oil (WTI): $50.29 U.S. per barrel

Gold: $1,309.45 U.S. per ounce

Silver: $17.21 U.S. per ounce

Copper: $2.9726 U.S. per ounce

Dollar Index: 91.83

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