USD/CAD – Canadian Dollar Recoups July Losses

The Canadian dollar recovered all its July losses and opened in New York right around where it started the month on July 2. USD/CAD opened the month in New York at $1.2431, rallied steadily until reaching $1.2805 on July 19, the retreated until opening today at $1.2440, a 6.0% move including travel time.

A downgraded Bank of Canada 2021 growth forecast, a steep drop in crude oil prices, and a bout of negative global risk sentiment propelled USD/CAD to the top. Those concerns faded in the latter part of the month. Oil prices rebounded, risk sentiment improved, and the Federal Open Market Committee decision led to widespread U.S. dollar selling and the USD/CAD went along for the ride.

Global equity markets were in retreat overnight. Disappointing earnings from Amazon (as if $7.8 billion in income in three months is bad) and the hangover from China’s stock market crackdown, fueled global equity market weakness, while month-end portfolio rebalancing flows and Eurozone data undermined the U.S. dollar.

Asia equity indexes closed with losses, led by Japan’s Nikkei 225 index, which is down 1.80%. European bourses are red, as the U.K. FTSE 100 and Germany’s DAX index dip 0.88%. Wall Street futures point to a negative open. WTI oil prices are a tad softer at $73.33/barrel, while gold is almost unchanged at $1828.54.

EUR/USD climbed to $1.1908 from $1.1876. Prices were supported after Eurozone Gross Domestic Product rose 2.0% q/q, beating the forecast of a 1.5% q/q increase, despite issues from the coronavirus delta strain. However, weaker than expected German GDP data (actual 1.5% q/q vs forecast 2.0% q/q) took the bloom off the rose. July Consumer Price Index topped the ECB target, rising to 2.2% y/y (forecast 2.0%y/y), while unemployment fell to 7.6% from 7.8%.

GBP/USD rallied from $1.3936 to $1.3982, continuing its string of higher tops. GBP/USD technicals are bullish above $1.2850 and gaining additional support with a break above the 100 day moving average at $1.3921.

U.S. data includes Personal income and Spending and PCE inflation

Canada May GDP is expected to have dropped 0.3%, the same as in April. The weakness is due to the third-wave coronavirus outbreak, which suggests June’s result will be better.

Canadian markets are closed Monday for a holiday.

Rahim Madhavji is the President of, a Canadian currency exchange that provides better rates than the banks to Canadians

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