The Canadian dollar has posted losses in the Thursday session, erasing the losses seen on Wednesday. In North American trade, USD/CAD is trading at 1.3066, up 0.54% on the day. In economic news, U.S employment claims edged lower to 210 thousand, beating the estimate of 215 thousand. The sole Canadian indicator, Corporate Profits, posted a gain of 1.0%. On Friday, Federal Reserve Chair Jerome Powell speaks at the Jackson Hole gathering of central bankers. As well, the U.S releases durable goods reports.
The Federal Reserve released the minutes of its July meeting, at which policymakers maintained the benchmark rate. The minutes noted that the U.S economy remains strong and hinted that the Fed would raise rates in September. However, policymakers added that there plan to continue with gradual rate increases could have to be halted if the global trade war worsened, as the trade war represented a major downside risk to the U.S economy. Fed Chair Jerome Powell will address the Jackson Hole Symposium on Friday, and investors will be listening carefully. Powell is expected to refer to trade tensions, as well as the fact that inflation and wage growth have lagged, despite a booming U.S economy. The minutes have cemented a rate hike in September, with market odds currently at 96%. The likelihood of a December rate hike stands at 57%.
Canadian retail sales declined 0.2% in June, missing the estimate of -0.1%. The soft reading did not spook investors, who chose to view the release as a pause in strong consumer growth – in May, consumer spending jumped 2.0%. The economy is performing well and inflation is higher, so the pieces appear in place for a quarter-point rate hike by the Bank of Canada in September. With the U.S expected to raise rates at least once more this year, there is pressure on the BoC to raise rates or watch the Canadian dollar lose ground to its U.S counterpart.
