Dollar holds poise despite equity wobble
Stock markets slumped to a one-month low yesterday on the back of dismal corporate earnings, lingering fears over Trump’s reform plan and the shocking attack in Barcelona. Yesterday, baseless rumours that Gary Cohn, Trump’s chief economic advisor, was gearing up to resign sent ripples through the S&P 500, reiterating just how highly regarded Cohn is by the wider markets. The rumours were swiftly denied by the White House but this case should go a long way to demonstrate to the President’s team that investors and the public aren’t just keeping an eye on Trump himself when it comes to governance and legislative progress. The loss of Cohn would be a big blow to tax and corporate regulatory reform that was so coveted by not just stocks, but also the dollar, on the campaign trail and it’s unlikely the staff will want to put him in such an awkward position again.
The greenback lost some ground as the rumours swirled but is looking relatively stable heading into the final trading day of the week, where there’s little on the calendar to draw too much attention away from the broader picture.
CAD gains as inflation stays the course
The loonie’s undergone a modest relief rally this morning courtesy of inflation staying the course. Despite meeting expectations and falling well within the Bank of Canada’s range of expectations, speculation that slowing commodities prices and a housing market under pressure had raised fears that inflation would miss expectations. USD/CAD now sits just above the 1.26 mark, marking a sharp recovery from the levels printed just yesterday.
Quiet day ahead
The calendar’s light today, and even lighter next week. The Jackson Hole Economic Symposium at the end of August is now the focal point for markets barring any surprises from the White House, Korean peninsula or elsewhere. University of Michigan consumer sentiment numbers later this morning will be eyed for any read-through to consumer price expectations but, with the reliability of survey-based data falling in recent months, will do little to excite the dollar.