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USD/CAD – Canadian Dollar Unchanged, Fed Rate Hike Looms

The Canadian dollar is unchanged in the Tuesday session. In North American trade, USD/CAD is trading at 1.3120. On the release front, it’s another quiet day, with no major US releases. There are no Canadian events on the schedule. On Wednesday, the Federal Reserve sets the benchmark interest rate and we’ll also get a look at US retail sales reports.

The Canadian dollar continues to impress, as the currency trades close to 7-week highs. Given that the currency is sensitive to oil prices, much of the currency’s improvement can be attributed to the recent surge in oil prices. OPEC members agreed to cut production earlier this month and proceeded to reach another a production agreement with Russia and other oil exporters on Saturday. The agreement between OPEC and non-OPEC oil exporters was the first since 2001, and if oil prices continue to rise, the loonie could post further gains.

The Federal Reserve meets for a highly-anticipated policy meeting on Wednesday. The markets have priced in a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and anticipation of a hike has translated into strong gains for the greenback.  Even though the rate hike has been expected (and priced in) for some time, such a momentous move could boost the greenback following a rate hike. What can we expect from the Fed after the hike? The Fed has indicated that it plans to raise rates gradually in 2017. However, this could change, given Trump’s declarations to increase government spending and cut taxes, which could lead to higher inflation levels. Once the new administration’s economic policies become clearer, the Fed may send signals to the markets as to its rate plans in early 2017.

USD/CAD Fundamentals

Tuesday (December 13)

Upcoming Key Events

Wednesday (December 14)

*All release times are EST

*Key events are in bold

USD/CAD for Tuesday, December 13, 2016

USD/CAD December 13 at 8:00 EST

Open: 1.3127 High: 1.3140 Low: 1.3115 Close: 1.3121

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.2951 1.3026 1.3120 1.3253 1.3371 1.3457

Further levels in both directions:

OANDA’s Open Positions Ratio

USD/CAD ratio remains unchanged in the Tuesday session. Currently, long positions have a majority (57%), indicative of trader bias towards USD/CAD reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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