Expected USD/CAD Range: 1.051 – 1.057 Update: This morning, Canadian GDP figures came in at expected levels while US personal spending and income figures were weaker than expected. The Canadian Dollar responded by regaining some ground lost earlier in the morning and is now flat at 1.053. Going into the last weekend of the summer, the markets will be focused on the (declining?) probability of military action in Syria with any indication that the US plans to make a move leading to USD strength and vice versa. The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have slowed notably. At the same time, the ongoing (admittedly halting) recovery in the US will sooner or later lead to a tapering of the Fed’s bond purchase programs. As to the timing of the announcement, there seems to be broad consensus forming about tapering beginning later this year with a majority of analysts focused on September. Closer to home, Canada’s new central banker shows no inclination towards tightening in the near future. As a result of all of this and not surprisingly, the CAD has declined 4% relative to the USD since the beginning of the year. We expect the CAD to be even lower relative to its US counterpart by the end of the year.
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