USD/CAD is stable on Wednesday, as the pair continues to trade in the mid-1.08 range, where it has been for most of the week. On the release front, US Current Account disappointed, as the deficit shot higher in May. Today’s highlight is the Federal Reserve policy statement and follow-up press conference. In Canada, Wholesale Sales looked sharp, posting a six-month high.
All eyes are on the Federal Reserve on Wednesday, as the US central bank will release a policy statement later in the day. The Fed is expected to trim its QE program by another $10 billion, which would reduce the asset purchase scheme to $35 billion/month. The big question is when the Fed will raise interest rates, but Fed chair Janet Yellen is unlikely to shed much light on that issue. If, as expected, QE is wound up in 2014, we could see a rate hike in the first half of 2015. However, cuts to QE are dependent on the health of the US economy, which continues to move in the right direction, despite some bumps in the road.
In the US, housing data was a disappointment, as Building Permits dropped to 0.99M, well below the estimate of 1.07M. As well, Housing Starts dropped to 1.00M, shy of the estimate of 1.04M. On the inflation front, CPI moved up modestly, posting a gain of 0.3%. This was the strongest gain we’ve seen since January 2013. CPI followed suit, climbing to an eleven-month high. The index rose to 0.4%, beating the estimate of 0.2%.
In Canada, there was more good news as Wholesale Sales, an important indicator of consumer spending, jumped 1.2% in May, crushing the estimate of 0.3%. Earlier in the week, Foreign Securities Purchases posted a gain of $10.13 billion, its highest level since last May. The estimate stood at $4.27 billion. The markets are hoping the strong numbers continue on Friday, with the release of Core CPI and Core Retail Sales.
USD/CAD for Wednesday, June 18, 2014
USD/CAD June 18 at 14:50 GMT
USD/CAD 1.0869 H: 1.0873 L: 1.0858
- 1.0906 continues to provide resistance. The key level of 1.1000 is stronger.
- 1.0852 is an immediate support level. The next support line is at 1.0775, which has held firm since January.
- Current range: 1.0852 to 1.0906
Further levels in both directions:
- Below: 1.0852, 1.0775, 1.0706 and 1.0678
- Above: 1.0906, 1.10, 1.1094 and 1.1177
OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged on Wednesday. This is consistent with the pair’s movement, as the pair is showing little movement. The pair has a majority of long positions, indicative of trader bias towards the US dollar posting gains.
The Canadian dollar continues to show little movement. The pair is unchanged in the North American session.
- 12:30 Canadian Wholesale Sales. Estimate 0.3%. Actual 1.2%.
- 12:30 US Current Account. Estimate -96B. Actual -111B.
- 14:30 US Crude Oil Inventories. Estimate -0.6M. Actual -0.6M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Fund Rate. Estimate <0.25%.
- 18:30 US FOMC Press Conference.
*Key releases are highlighted in bold
*All release times are GMT