August Doldrums or Not?

We are starting to feel the full effects of the notorious “August doldrums,” but this is not a typical year.

The lack of movement in the Forex market that we normally experience is coupled with various triggering events such as the Turkish crisis, which is still being dealt with.

The Canadian dollar (CAD) is up against the dollar and performing considerably well. Previously the CAD was heavily tied to the performance of oil prices and threats of more aggressive trade policies. However, with NAFTA talks revamped and negotiations seemingly going well for all parties involved, the CAD has found some reinvigoration – it also helped that CPI inflationary numbers came out higher than expected.

The Euro (EUR) is also on recovery mode, after having fallen to its weakest level in 13 months against the US dollar. This is partially attributed to GDP numbers coming out better than expected and Greece having left its 3-year bailout plan (from 2015).

Back home, US economic data has been consistently positive, nevertheless, this might not be enough to protect the dollar from a downturn. Trade tensions, currency conflicts, and positive economic data from other parts of the world could negatively impact the dollar. Previously the dollar was acting as a safe-haven currency but with the Eurozone appearing more stable (and consequently more attractive to investors) we expect the dollar to take a hit.

Looking towards the rest of this week, we are keeping a close eye on the Fed minutes coming out on Wednesday.

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