CAD faces challenges following BoC rate cut

Key Movers

The US Dollar Index (DXY), which tracks the greenback’s value against six major currencies, fluctuated this morning in the low 104 levels. In data news, the Flash US Gross Domestic Product (GDP) report, which is the broadest measure of aggregate economic activity, showed that the US economy grew at a robust pace of 2.8%. This was double the prior release of 1.4%. Economists expected the economy to have grown by 2.0%, and rising above that level has strengthened the US economic outlook. The USD/CAD pair posted fresh eight-month highs near 1.3850 after robust US GDP growth.

In the Eurozone, the EUR/USD pair gave up some gains after rising to near the 1.086 level this morning after robust US Q2 flash GDP data. European Central Bank (ECB) President Christine Lagarde spoke this morning, noting that future direction is pointing to two further ECB rate cuts in September and December.

The GBP/USD pair was down this morning to the 1.2892 level. The GBP remained under pressure since last week, although it seemed to be making attempts to stabilize. Statistics released earlier today showed that UK private sector activity improved in July. The data aligned with forecasts and confirmed the positive sentiment in industrial production after the Labour Party’s convincing election victory.