USD/CAD Lower Ahead of Fed and GDP Data

The Canadian dollar drifted closer to the 80-cent US level Monday morning as the American currency strengthened ahead of this week’s interest rate meeting by the U.S. Federal Reserve.

The loonie declined 0.2 of a cent to 80.29 cents US.

The currency tumbled 3.5 per cent last week to its weakest level in six years after the Bank of Canada surprised markets last week with a quarter-point cut in its key overnight rate to 0.75 per cent.

The U.S. Federal Reserve holding its interest rate meeting on Wednesday. The Fed has been widely expected to start moving rates away from near zero around the middle of this year and traders will be looking for any sign that the central bank could move earlier.

Other major data points this week include the latest economic growth figures for Canada and the U.S.

Economists expect that Canadian gross domestic product grew a slight 0.1 per cent during November, reflecting disappointing reports for manufacturing and wholesale sales. Oil prices started to collapse at the end of that month and analysts note that future GDP reports will detail how that decline is affecting the economy.

Prices have fallen more than 40 per cent since the end of November when Saudi Arabia rejected calls to cut production in order to support prices. Overall, prices are down about 55 per cent from the highs of last summer as the marketplace works through a huge imbalance in supply and demand.

via Witco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza