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USD/CAD dips as Powell weighs on US dollar

The Canadian dollar produced another winning week against the greenback, for a seventh consecutive time. In Monday’s European session, USD/CAD is trading at 1.3070, down 0.21% on the day.

US dollar dips as Powell loosens inflation target

The US dollar retreated against its major rivals on Friday, in response to dramatic comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium. Powell announced that the Federal would loosen its inflation target of 2 percent and allow inflation to exceed the target, which has been a long-standing tenet of Fed monetary policy. Under the new approach, the Fed’s target will shift to an “average inflation” of 2%, which means that inflation could exceed the 2% level after a period of weak inflation. The markets interpreted this to mean that the Fed plans to keep interest rates at ultra-low levels for the foreseeable future. The US yield curve steepened to a tw0-month high, and the Canadian dollar jumped on the bandwagon on Friday and posted modest gains. The currency is poised to record an excellent month of August – with only one trading day left, USD/CAD has declined by 2.5 percent.

Canada’s economy continues to recover, after sustaining back-to-back declines in GDP earlier in the year. In June, the economy gained 6.5%, up from 4.5% in May. This beat the estimate of 5.2%, as the GDP releases beat their forecast for a fourth successive month. The strong release is another indication that the recovery is taking hold in Canada, which should be good news for the Canadian dollar.

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USD/CAD Technical

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Kenny Fisher

Kenny Fisher [6]

Market Analyst at OANDA [7]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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