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The scrilla hardly stood a chance against political drama in Washington and a cautious Fed outlook on trade concerns. On the flip side, the Loonie managed to draw support from higher crude oil and a few NAFTA updates.

  • Canada’s core retail sales down 0.1% in July as expected
  • Canadian headline retail sales fell 0.2% vs. projected 0.1% dip
  • U.S. existing home sales down from 5.38M to 5.34M vs. 5.40M forecast
  • U.S. EIA crude oil inventories down 5.8M barrels vs. projected 1.6M fall
  • FOMC minutes: Downside risks from trade, housing, and emerging markets
  • FOMC minutes: GDP growth to slow in second half of 2018
  • Fed: Seeing “considerable momentum” in household and business spending

Major Events/Reports:

White House drama

Updates from Washington hogged the headlines as newswires picked up on one development after another in the latest Trump-Cohen episode. In an interview with FOX, Trump said he only found out about the payments “later on.”

Of course the Donald’s Twitter spree made things even more interesting.

White House press secretary Sanders also held a news conference in the briefing room, reiterating that “The President has done nothing wrong and there are no charges against him.” Still, this wasn’t enough to stop people from buzzing about the I-word and speculating about a political shakeup in the November polls.

NAFTA developments

Not much on the Canadian front as the negotiations are starting off between the U.S. and Mexico, but the fact that they’re taking small steps forward is a glimmer of hope.

A piece on Politico focused on the handshake deal between Mexico and the U.S. in the latest round of talks, citing that the two parties are starting to see eye-to-eye in a few auto issues. It also noted that an official announcement may be due this week, paving the way for Canada to rejoin the negotiations soon.

A representative from the USTR office clarified that there has been no deal yet as major issues are still on the table. Talks between the trade negotiators of U.S. and Mexico are set to resume this Thursday.

Trade concerns in FOMC minutes

Although the transcript of the Fed’s latest policy huddle signaled that officials were seeing another likely hike next month, dollar traders seemed to zero in on trade concerns raised during the meeting.

While members agreed that “stronger underlying momentum in the economy was an upside risk,” they also pointed out:

On the downside, trade policies could move in a direction that would have significant negative effects on economic growth.

In their respective districts, Fed officials pointed to upward pressures on prices due to tariffs but also noted:

Districts reported that uncertainty regarding trade policy had led to some reductions or delays in their investment spending.

On a less downbeat note, policymakers mentioned that some businesses “had not yet cut back their capital expenditures or hiring” on account of trade disputes. For now, they’re still seeing “considerable momentum” in household and business spending but warned that GDP growth could slow in the second half of this year.

Major Market Mover(s):


A combination of NAFTA progress and a pickup in crude oil prices thanks to a larger than expected draw in U.S. stockpiles lifted the Loonie’s spirits throughout the session.

USD/CAD is down from 1.3022 to a low of 1.2986, CAD/JPY advanced from 84.83 to a high of 85.13, EUR/CAD retreated to 1.5070, and GBP/CAD fell to 1.6784.


Increased concerns about trade tensions were the main takeaways from the FOMC minutes, and it didn’t help the dollar’s cause that the spotlight was still on U.S. political drama.

However, the scrilla’s drop was noticeably slower during the session and it was still able to end higher versus the yen.

USD/CHF pulled up to .9841 then sank back to a low of .9817, EUR/USD dipped to 1.1587 then popped back to 1.1608, AUD/USD reached a high of .7371, and NZD/USD held on to the .6700 handle.

Watch Out For:

  • 12:30 am GMT: Japanese flash manufacturing PMI (gain from 52.3 to 52.4 expected)