The Canadian dollar continues to lose ground, as the currency has posted five straight losing sessions. Currently, USD/CAD is trading at 1.2997, up 0.28% on the day. On the release front, Canadian Housing Starts dropped sharply, from 201 thousand to 189 thousand, well short of the estimate of 203 thousand. On Wednesday, Canada releases Building Permits, while the U.S publishes PPI and the U.S Treasury Currency report, a semi-annual publication.
Traders are awaiting the U.S Treasury’s next foreign exchange report, which was last released in April. In that report, the U.S did not name any of its major partners as currency manipulators, but it did criticize China for the “non-market direction” of its economy. Since then, the Trump administration has imposed some $200 billion in tariffs on Chinese goods. China has retaliated with its own tariffs on U.S goods, and there has been speculation that China could respond to the U.S tariffs by devaluating the Chinese yuan, in order to bolster Chinese exports. In 2015 and 2016, the markets dropped sharply on fears that China would implement a major devaluation of its currency. The report should be treated as a market-mover.
