Canadian Dollar Update – Canadian Dollar Awaiting Canada Day

• Canadian economy is expected to have grown 0.3% m/m in April.
• Canadian markets are closed on Monday.
• US dollar opens mixed after choppy overnight session

USDCAD: open 1.3695, overnight range 1.3693-1.3735, close 1.3701, WTI $82.56, Gold, $2330.35

The Canadian dollar opened close to unchanged after a choppy overnight session due to a mix of US presidential politics and caution ahead of today’s key US inflation numbers.

The Canadian dollar may get a boost when GDP data is released. Statistics Canada estimated that the Canadian economy would grow 0.3% m/m in April, compared to 0% in March. If so, it would suggest that the BoC may take more time before cutting rates. However, a weaker than expected result would raise the odds for a July rate cut which would knock the Loonie lower.

US inflation is in the spotlight. The US Core Personal Consumption Expenditures Price Index is expected to have risen 0.1% m/m in May, a tick below the 0.2% in April, and 2.6% y/y compared to 2.8% y/y in April. The Fed pays close attention to this data, so markets are fixated on it. Lower than expected results will spark a flurry of Fed rate cut bets and raise the odds for a September move. The US dollar will plunge, and bond yields will fall. Of course, the opposite will occur after a higher than expected result.

EURUSD traded in a 1.0684-1.0711 band with traders very cautious ahead of the French election on Sunday.

GBPUSD traded in a 1.2622-1.2659 range with prices supported by better than expected GDP data. (actual 0.7% q/q vs. forecast 0.6%).

USDJPY rallied then sank in a 160.43-161.28 range. Prices were roiled by a mix of data, US presidential politics, and an internal Japanese Finance Ministry job shuffle. Tokyo inflation rose 2.1% y/y in June compared to 1.9% in May. Japan’s Ministry of Finance replaced its top FX official Masato Kanda with Atsushi Mimura.

Canadian markets are closed Monday.

AUDUSD is at the top of its overnight 0.6619-0.6662 range due to broad US dollar weakness ahead of the US data