FX Action: USD-CAD has recouped to around 1.2950
FX Action: USD-CAD has recouped to around 1.2950 after printing a one-week low of 1.2917 yesterday, as the Canadian Dollar found support from a rally in WTI crude prices. U.S. versus Canada yields differentials have also moved in favour of the Loonie of late. Canada releases data of interest this week. Manufacturing sales values (up today) are projected to fall 0.5% in August after the 0.9% improvement in July. This is the first report that directly informs the monthly GDP projection -- analysts have penciled in a 0.1% rise in August (m/m, sa) after the 0.2% improvement in July. The separate Q3 GDP measure is running at a 1.8% clip in Q3, suggesting the BoC will mark up its 1.5% estimate in the October Monetary Policy Report due October 24. CPI (Friday) is seen rising 0.1% in September on a month comparable basis after the 0.1% rise in August. Annual CPI growth is projected to slow to a 2.7% y/y pace in September from 2.8% in August and the lofty 3.0% growth rate in July, adding further support to the Bank's view that the run-up in CPI through July was due to temporary factors that are now unwinding. August retail sales (Friday) are expected to improve 0.6% after the 0.3% gain in July. Overall, the data should be supportive for the Canadian currency. Analysts expect the BoC to hike 25 bp at the October 24 announcement and have penciled in three to four 25 bp rate hikes in 2019.