{"id":103387,"date":"2020-08-17T14:03:06","date_gmt":"2020-08-17T13:03:06","guid":{"rendered":"https:\/\/currencylive.com\/news\/?p=103387"},"modified":"2020-08-17T20:34:07","modified_gmt":"2020-08-17T19:34:07","slug":"103916-usd-cad-in-bear-grip-as-us-fed-dovishness-beats-the-canadian","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/103916-usd-cad-in-bear-grip-as-us-fed-dovishness-beats-the-canadian\/","title":{"rendered":"USD\/CAD in Bear Grip as US Fed Dovishness Beats the Canadian"},"content":{"rendered":"<ul>\n<li><span style=\"font-weight: 400\">Japan records its worst-ever GDP contraction.<\/span><\/li>\n<li><span style=\"font-weight: 400\">The difference in the Federal Reserve and Bank of Canada policy stance affecting USD\/CAD<\/span><\/li>\n<li><span style=\"font-weight: 400\">The pair below a pivotal point<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">Japan&#8217;s second-quarter GDP data showed that the economy had suffered its most severe economic contraction to date. The Nikkei 225 stock index and the Japanese Yen suffered on the announcement.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The dollar continued its recent downtrend, as shown in the dollar index against a basket of currencies. The index, DXY, is below the psychologically important 93 levels. While gold is back above 1,950 dollars for an ounce and silver is also back in strength with 1.7 Percent bounce; the US Treasury yields on 10-year notes are down below 70 basis points.<\/span><\/p>\n<p><span style=\"font-weight: 400\">As the economic docket is comparatively light, the focus would be on the US-China relations, especially after the two mightiest economies on the planet failed to adhere to a scheduled trade review meeting between them, over the weekend.<\/span><\/p>\n<h3>USD\/CAD Might Face Further Downside<\/h3>\n<p><span style=\"font-weight: 400\">The current decline in USD\/CAD &#8211; down by 10 Percent from the multi-year high of 1.4669 posted on March 19 &#8211; is attributable to the highly dovish stance of the US Fed in response to the economic travails caused by the coronavirus.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The members of the US Fed are now considering letting inflation climb above two Percent. The dovishness is to compensate for the period in which the inflation stayed below that. Comments from Minneapolis Federal Reserve President Neel Kashkari on similar lines reflect this thinking and have thus ruled out any chances of monetary tightening by the Fed.<\/span><\/p>\n<p><span style=\"font-weight: 400\">This intentional allowing of inflation overshoot could drive down the US dollar further against the Canadian dollar as Canada&#8217;s central bank has adopted a much more conservative approach to inflation targeting than the Fed.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Hence, it is reasonable to expect the Canadian dollar to strengthen against the US dollar if consumer price beats the market estimate of 0.5 Percent YoY rise in July.<\/span><\/p>\n<h3>Canada Economy Exceeds Expectations<\/h3>\n<p><span style=\"font-weight: 400\">Apart from the monetary approach by its central bank, the strong performance by the economy also supports the Canadian dollar.<\/span><\/p>\n<p><span style=\"font-weight: 400\">There is a high correlation between the decline in USD\/CAD and the significant positive surprises posted by the Canadian economy compared to the US economic performance.<\/span><\/p>\n<p><span style=\"font-weight: 400\">But, also noticeable is the lack of complete inverse relationship when US economy positive surprise exceeds those posted by its Canadian counterpart.<\/span><\/p>\n<p><span style=\"font-weight: 400\">This trend is worth monitoring and could add more importance to the upcoming retail sales and ADP employment data for July.<\/span><\/p>\n<p><span style=\"font-weight: 400\">We can expect better than expected economic releases to further USD\/CAD downslide.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Japan records its worst-ever GDP contraction. The difference in the Federal Reserve and Bank of Canada policy stance affecting USD\/CAD The pair below a pivotal point Japan&#8217;s second-quarter GDP data showed that the economy had suffered its most severe economic contraction to date. The Nikkei 225 stock index and the Japanese Yen suffered on the [&hellip;]<\/p>\n","protected":false},"author":163946612,"featured_media":5436,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1694,1381],"tags":[3136,1680,3135,1408,2330,1543,1398,1869],"class_list":{"0":"post-103387","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-cad","8":"category-usd","9":"tag-adp-employment","10":"tag-cad","11":"tag-dxy","12":"tag-fed","13":"tag-japanese-yen","14":"tag-us-china","15":"tag-usd","16":"tag-usd-cad"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>USD\/CAD in Bear Grip as US Fed Dovishness Beats the Canadian - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/103916-usd-cad-in-bear-grip-as-us-fed-dovishness-beats-the-canadian\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Stelian Olar\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/103916-usd-cad-in-bear-grip-as-us-fed-dovishness-beats-the-canadian\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/103916-usd-cad-in-bear-grip-as-us-fed-dovishness-beats-the-canadian\\\/\"},\"author\":{\"name\":\"Stelian Olar\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/c83637dd6dc82bcaadbc8b6c994d1186\"},\"headline\":\"USD\\\/CAD in Bear Grip as US Fed Dovishness Beats the Canadian\",\"datePublished\":\"2020-08-17T13:03:06+00:00\",\"dateModified\":\"2020-08-17T19:34:07+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/103916-usd-cad-in-bear-grip-as-us-fed-dovishness-beats-the-canadian\\\/\"},\"wordCount\":435,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/103916-usd-cad-in-bear-grip-as-us-fed-dovishness-beats-the-canadian\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100942-gbp-eur-inflation-data-moves-rate.jpg\",\"keywords\":[\"ADP employment\",\"cad\",\"DXY\",\"fed\",\"Japanese Yen\",\"us - 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