Daily Currency Update

USD - US Dollar

U.S. data released today typically doesn't sway the markets much. The metrics concerning unit labor costs and productivity are based on Q2 GDP figures. It's notable that the Q2 GDP was recently revised down to 2.1% from 2.4%. Although weekly unemployment claims could pique some interest, the significance might be limited. The numbers for these claims have dropped over the past three weeks, landing at 228k, with the four-week rolling average at 237.5k. The peak for this four-week average this year was in June, approximately 257k. Today, while the markets are active, four regional Fed presidents will share their insights. Among them, three (Harker, Goolsbee, and Williams) are voters, with Bostic being the fourth. Their perspectives are largely understood. After market hours, Fed Governor Bowman will participate in a panel discussing the future of currency.

CAD - Canadian Dollar 

The Bank of Canada maintained a hawkish stance in line with expectations, following rate increases in both June and July. The Bank acknowledged that while demand is exceeding supply, domestic demand actually went up in the second quarter, even though GDP shrank by 0.2%. The Bank also signaled that it is ready to raise interest rates if measures of core inflation do not decline. According to the swaps market, there's roughly a 50% chance that the Bank will increase rates in either the October or December meetings; these odds remained virtually the same by the end of the trading day. Data on July's building permits and August's IVEY survey are taking a back seat to the much-anticipated jobs report due tomorrow. After a loss of 6,400 jobs in July, a recovery is anticipated. Bloomberg's median forecast suggests an increase of 17,500 jobs, a figure that is considerably less than the monthly average job growth of around 40,600 through July. It's worth noting that the second-quarter GDP contraction might give an exaggerated impression of economic deceleration. Observe the USD/CAD trends.

Technical Analysis

The greenback is consolidating its recent surge against the Canadian dollar near five-month highs. It is trading in a narrow range so far today (~CAD1.3630-55). A break of CAD1.3700 could see CAD1.3800-20.