The Canadian dollar has reversed directions on Tuesday and posted losses. In the North American session, the pair is trading at 1.3460. On the release front, Canada’s current account deficit narrowed to C$18.3 billion, but this missed the estimate of C$16.4 billion. US Preliminary GDP sparkled in the third quarter, gaining 3.2%, which was above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. Later in the day, the US releases CB Consumer Confidence, which is expected to improve to 101.3 points. On Wednesday, OPEC members meet in Vienna. As well, key US employment indicators kick off with the release of ADP Nonfarm Employment Change. The markets are expecting a strong improvement, with an estimate of 161 thousand.
OPEC members will meet in Vienna on Wednesday, hoping to reach an agreement to cap production in order to boost oil prices. OPEC wants to include non-OPEC countries as well, and Russia has come out in favor of a freeze. However, it’s far from certain that OPEC members will reach an agreement. Iraq, Libya and Nigeria have all asked to be left out of a deal which would require production cuts. Previous attempts to reach a cap agreement have ended in failure, and it’s questionable whether this time will be any different. Given the uncertainty as to whether an agreement will be reached, we could see continue to see strong movement from the Canadian dollar this week, as the currency is closely tied to oil prices. If a deal is reached, the Canadian dollar could post strong gains.
It’s a virtual certainty that the Fed will raise interest rates a quarter-point in December, with the odds of a rate hike at 93 percent. The Fed minutes were released on Thursday, indicating that policymakers felt it appropriate to raise rates “relatively soon”. Earlier this month, Fed Chair Janet Yellen used the same phrase in her testimony before a congressional committee. The minutes indicated that some members argued that the Fed needs to raise rates in December in order to preserve the bank’s credibility – despite some broad hints of rate hikes during 2016, the Fed has stayed on the sidelines throughout 2016, causing significant disappointment and frustration in the markets.
Tuesday (November 29)
- 8:15 US FOMC Member William Dudley Speech
- 8:30 Canadian Current Account. Estimate -16.4B. Actual C$16.4B
- 8:30 US Preliminary GDP. Estimate 3.0%. Actual 3.2%
- 8:30 US Preliminary GDP Price Index. Estimate 1.5%. Actual 1.4%
- 9:00 US S&P/CS Composite-20 HPI. Estimate 5.3%
- 10:00 US CB Consumer Confidence. Estimate 101.3 points
- 12:40 US FOMC Member Jerome Powell Speech
Upcoming Key Events
Wednesday (November 30)
- All Day – OPEC Meetings
- 8:15 US ADP Nonfarm Employment Change. Estimate 161K
*All release times are EST
*Key events are in bold
USD/CAD for Tuesday, November 29, 2016
USD/CAD November 29 at 8:40 EST
Open: 1.3404 High: 1.3480 Low: 1.3399 Close: 1.3457
- USD/CAD posted slight gains in the Asian and European sessions. Early in the North American session, the pair posted gains but then retracted
- 1.3371 is providing support
- 1.3457 is fluid and is currently a weak resistance line
Further levels in both directions:
- Below: 1.3371, 1.3253 and 1.3120
- Above: 1.3457, 1.3551, 1.3648 and 1.3782
- Current range: 1.3371 to 1.3457
OANDA’s Open Positions Ratio
USD/CAD ratio is unchanged in the Tuesday session. Currently, short positions command a strong majority (57%), indicative of trader bias towards USD/CAD continuing to move to lower ground.
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