Senate has failed to pass Trump's Healthcare act to replace Obamacare. This is a major defeat for Trump and we should a delay for Trump to push forward Trump's healthcare act. This news came out to be negative USD, putting pressure on USD which is already beaten down. Due to investors forsaking USD and a quiet US session, we see other currencies such as AUD, CAD and EUR strengthening against USD.
BOC has recently hiked interest rates by 25 basis points, the first time in past 7 years. BOC governor cited that interest rates will be higher, this is in light of positive data, with recent data on the economy being positive and BOC target levels within reach.
On the other hand, we noted the weakness of USD in our previous article, with the possibility of september rate hike unlikely.
Given the strengths of CAD and weakness of USD, trading USDCAD in favor of the downside is the best option at the moment.
Over the past week, we see US dollar weakening. Fed Yellen did not set a hawkish tone during her address. It was highlighted that inflation figure is a concern, below the targeted inflation rate of Fed, with year on year consumer price index rate dropped to lowest in 8 months. Retail sales also contracted slightly. With that, September rate hike should be likely be put on hold. During this period, we observe that other central banks seem to be hawkish of the economy, an indication of rate hike.
That explains and suggests that demand for US dollar to be negatively impacted while favoring other currencies with which central banks are hawkish. We observe the strengthening of GBP, AUD and CAD.
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