The Canadian dollar has shown some movement on Wednesday, but is almost unchanged on the day. Early in the North American session, USD/CAD is trading at 1.3170. On the release front, Canadian Wholesales Sales dropped to 0.3%, matching the forecast. Later in the day, the Federal Reserve releases its policy statement and sets the benchmark rate, which is expected to remain pegged at 0.25 percent. On Thursday, the US releases unemployment claims.
Canadian Wholesale Sales posted a weak gain of 0.3% in July. The indicator was as high as 1.8% in May, but has slid sharply since that time. The markets will be hoping that the downward trend will not extend to retail sales reports, which will be released on Friday. If retail sales, a key gauge of consumer spending, fail to meet expectations, the wobbly Canadian dollar could lose ground.
Most investment strategists and economists are anticipating that the Fed will hold the benchmark interest rate unchanged opting instead to tweak the Federal Open Market Committee (FOMC) statement and use the dot plot to signal a December rate hike. Fed Chair Yellen is expected to drive the message further during her press conference. Back in August, Yellen spoke in very positive terms about the US economy, and this raised hopes that the Fed might raise rates in September. However, these expectations were largely dashed after the US posted disappointing GDP and employment reports. Recent comments from FOMC members, which have been almost contradictory at times, have left the markets confused and reinforced the perception that the Fed remains divided regarding its near-future monetary policy. A clear and decisive message from Yellen could go a long way in improving market sentiment. If the Fed provides some clues about a December move, the US dollar could move higher. Even if the Fed does go ahead with a December hike, it will prove to be a token raise, coming a year after the last rate hike. In December 2015, the Fed hinted that it expected to implement a series of rate hikes in 2016, but to the market’s chagrin, this never materialized.
Wednesday (September 21)
- 8:30 Canadian Wholesale Sales. Estimate 0.3%. Actual 0.3%.
- 10:30 US Crude Oil Inventories. Estimate 3.2M
- 14:00 FOMC Economic Projections
- 14:00 FOMC Federal Funds Rate. Estimate <0.50%
- 14:30 FOMC Press Conference
Thursday (September 22)
- 8:30 US Unemployment Claims. Estimate 261K
* Key releases are in bold
*All release times are EDT
USD/CAD for Wednesday, September 21, 2016
USD/CAD September 21 at 9:00 GMT
Open: 1.3181 High: 1.3205 Low: 1.3138 Close: 1.3175
- USD/CAD showed limited movement in the Asian session and posted small losses in European trade. The pair has reversed directions and moved higher in North American trade
- 1.3120 is providing support
- There is resistance at 1.3253
Further levels in both directions:
- Below: 1.3120, 1.3028 and 1.2922
- Above: 1.3253, 1.3371 and 1.3457
- Current range: 1.3120 to 1.3253
OANDA’s Open Positions Ratio
USD/CAD ratio is unchanged in the Wednesday session. Currently, short positions have a strong majority (72%), indicative of trader bias towards USD/CAD continuing to move downwards.
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