Expected USD/CAD Range: 1.032 – 1.039 Update: The Canadian Dollar is slightly stronger this morning at around 1.034 and just around its 100 day moving average. The US President postponed military action against Syria indefinitely by asking Congress not to hold a vote on the issue until further notice. The market is now almost entirely focused on Friday’s jobless claims numbers out of the US and what those numbers may say about September tapering by the Fed. 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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