The US dollar is down 1% since yesterday morning against its Canadian counterpart. The primary reason for the decline is the very cautious tone taken by Fed Chairman Powell in his press conference yesterday afternoon. There was little indication in what he said that the US central bank is moving towards reining in monetary stimulus despite its increasingly optimistic view of the economy. That inclination towards not putting on the brakes on stimulus any time soon put pressure on USD and it traded down against CAD and most other currencies. This morning, U.S. GDP figures for the second quarter were released and the country’s economy grew at a 6.5% annual rate, pushing past its pre-pandemic level, but falling short of consensus expectation of 8.5% growth. The disappointing GDP report seemed to justify the Fed’s cautious tone and put further pressure on USD. USD to CAD is currently at 1.247 (CAD to USD at 0.802). The Canadian dollar is at its highest point in two weeks. May GDP in Canada is out tomorrow morning and while it is unlikely to move the exchange rate, it will provide another piece of the puzzle as to the economic picture in Canada.
