Canadian Dollar Rises As Traders Focus On Jackson Hole, GDP Data

(RTTNews) - The Canadian dollar strengthened against other major currencies in the European session on Friday, as traders await the highly anticipated speech by Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole Symposium later in the day.

The hints Kevin Warsh might give about the direction of U.S. monetary policy are the main focus of market interest. Given the ongoing inflation, investors are especially interested in finding out if the Fed is thinking about tightening monetary policy.

Markets now price in a 40% likelihood of a rate increase in September, up from 36% prior to the publication, according to the CME FedWatch tool.

Ahead to Jackson Hole, a number of Fed officials have likewise adopted a hawkish stance. According to Kansas City Fed President Jeffrey Schmidt, authorities must keep searching for ways to reduce inflation because it is still "sticky." Beth Hammack, president of the Cleveland Fed, stated that it is "time to act," alluding to additional rate increases.

The Canadian GDP data for the second quarter, which is expected later today, is another item that investors are anticipating. After a 0.1% decline in the first quarter, growth is anticipated at 3.4% YoY.

Due to fresh trade concerns with the United States (US), the Canadian dollar (CAD) may continue to be susceptible. Canada's list of retaliatory actions now includes 50% duties on a number of US goods, such as wood charcoal and copper wire. The Canadian economy could be negatively impacted by an increase in trade hostilities, which would also limit the Loonie's potential to gain value relative to the US dollar.

In the European trading today, the Canadian dollar rose to a 2-day high of 1.3845 against the U.S. dollar, a 1-week high of 115.33 against the yen and a 4-day high of 1.6123 against the euro, from early lows of 1.3859, 115.01 and 1.6144, respectively. If the loonie extends its uptrend, it is likely to find resistance around 1.37 against the greenback, 116.00 against the yen and 1.60 against the euro.

Against the Australian dollar, the loonie edged up to 0.9965 from an early low of 0.9978. The loonie may test resistance around the 0.96 region.

Looking ahead, U.S. Chicago PMI for August, U.S. University of Michigan's consumer sentiment for August and U.S. Baker Hughes oil rig count data are slated for release in the New York session.