The Canadian dollar continues to travel south, as USD/CAD trades in the low-1.09 range on Friday. In the US, the markets will have plenty of data to sort through, with three key events later in the day - Nonfarm Employment Change, Unemployment Rate and ISM Manufacturing PMI. We'll also get a look at consumer confidence levels, with the release of UoM Consumer Sentiment. There are no Canadian releases on Friday.
Unemployment Claims came in at 302 thousand on Thursday, higher than the previous release but very close to the estimate of 303 thousand. Earlier in the week, ADP Nonfarm Payrolls posted a sharp drop. If the official NFP release follows suit and misses the estimate of 234 thousand, the US dollar could give up some if its recent gains. Meanwhile, US GDP exceeded expectations in the second quarter, as the economy expanded at an annual rate of 4.0%. This easily beat the estimate of 3.1% and marked the strongest quarter of economic growth since Q4 in 2009. The boost in economic activity was helped by strong consumer confidence and business investment, as well as solid employment data.
The Federal Reserve released a policy statement on Wednesday, with the Fed sounding somewhat dovish in tone. Policymakers acknowledged lower unemployment levels, but noted that "there remains significant underutilization of labor resources" in the economy. The Fed statement reinforces the view that the US central bank is in no rush to raise interest rates after the termination of QE, which is expected in October. As well, the Fed said that inflation levels have moved somewhat closer to the Fed's target of 2.0%.
The Canadian dollar has had a rough week, losing about 140 points and trading at its lowest levels since early June. The loonie showed signs of life on Thursday, courtesy of unexpected positive news from Canadian GDP. The key indicator rose 0.4% in June, edging above the estimate of 0.3%. However, it didn't take long for the US dollar to recover, as USD/CAD is back above the 1.09 line.
USD/CAD 1.0929 H: 1.0944 L: 1.0906
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