USD, CAD flows: USD steady but CAD under pressure
US trade data USD negative, but little impact thus far. CAD suffers from weaker GDP
Despite a much larger than expected US goods trade deficit in July, he USD is generally nt much changed but higher against yen CAD, which is suffering from a weaker than expected June and Q2 GDP reading. The 0.4% decline in Q2 GDP puts the BoC under some pressure to ease further, and Canadian 2 year yields are down around 4bps. There should be scope for USD/CAD to press back up towards 1.38.
However, the USD ought to be suffering a little from the higher than expected trade deficit, as this does undermine Q3 growth prospects, although it is relatively early days. More large trade deficits will also likely increase the tendency of the Trump administration to favour a lower USD.