USDCAD resumed the downtrend, as Q2 GDP of Canada showed 4.5% rise exceeding 3.7% forecast, and pushing the odds for September rate hike to 41% from 27.5% just a day ago. The pair closed Thursday below 1.25 again, and there are some arguments in favor of further selloff of the pair.
The Canadian currency is supported by the sharp rise in Brent, as 30% of Canadian budget is dependent on the oil and gas sector. The crude oil reacted to the consequences of hurricane Harvey. It has paralyzed at least 4.4 million barrels per day (bpd) of refining capacity, sending Brent to 52.89 high. And it may support the demand on Brent further, driving CAD higher as well.
And take in mind Friday’s Non-Farm report that is not expected to be really strong after July positive surprise. Besides, the statistics is against USD: during last 20 years August NFP data was lower than expected in 16 cases.
In this environment we expect further depreciation of USD/CAD with the next target at 1.24 area.