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USD / CAD - Canadian dollar catches an updraft

- Loonie rebounds as Fed rate hike risks ease.

- Hurricane Idalia may distract NY markets.

- USD opens mixed, consolidating yesterday’s losses.

USDCAD: : open: 1.3563-67, overnight range: 1.3552-1.3578, close 1.3554, WTI $81.77, Gold $1937.99

The Canadian dollar rebounded yesterday after US Consumer Confidence data and the JOLTS job openings report were weaker than expected.

JOLTS job openings were 8.827 million compared to the forecast of 9.465 million. The 338,000 decline brought the result to its lowest level in nearly 2 ½ years.

The Conference Board Consumer Confidence Index declined to 106.1 in August from the downwardly revised 114.0 in July. The statement said, "August’s disappointing headline number reflected dips in both the current conditions and expectations indexes. Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular."

Analysts quickly concluded that the results meant that the Fed’s 525 basis points of rate hikes since March 2022 are working and that policymakers may be less motivated to raise rates further.

The 10-year Treasury yield and the US dollar dropped, while equities rallied, which set the tone for today’s US ADP employment, GDP, and Pending Home Sales data.

The Canadian dollar also got a bit of support from higher oil prices. West Texas Intermediate climbed to $81.88/barrel overnight from $79.73/b yesterday due to broad US dollar weakness and hopes that the end of the Fed's tightening cycle would reignite demand.

EURUSD moved higher and currently rests at the upper end of its 1.0855 to 1.0894 overnight range, as prices consolidated yesterday's gains.

The rise is supported by higher German inflation readings indicating a possible hawkish tilt from the European Central Bank (ECB) in its upcoming September meeting.

GBPUSD traded in a 1.2619 to 1.2670 range, mirroring EURUSD moves with traders awaiting today’s US data.

USDJPY bounced in a 145.77-146.57 range and is trading in NY at 146.38. The pronounced volatility was prompted by lackluster Consumer Confidence data (actual: 36.2 vs. forecast: 37.5) and comments from Bank of Japan officials. Naoki Tamura, a board member, said he was confident that the 2% inflation target was in sight but would have more clarity in the first quarter of 2024.

AUDUSD chopped in a 0.6450-0.6483 range, with the impact of the weaker-than-expected inflation data (actual 4.9% vs forecast 5.2% y/y) already faded.

Today’s US data includes ADP Employment, Q2 GDP, Wholesale Inventories, and Pending Home Sales. The Canadian calendar is empty.