- MarketPulse - https://www.marketpulse.com -

USD/CAD – Canadian Dollar Edges Higher, Wholesale Sales Next

The Canadian dollar has started the new trading week quietly, as USD/CAD trades at 1.3370 in the Monday session. On the release front, the sole US release is Flash Services PMI, with the index expected to rise to 55.5 points. There are no Canadian events on the schedule. On Tuesday, Canada releases Wholesale Sales, with the estimate standing at 0.3%.

Federal Reserve Chair Janet Yellen has worked hard at improving transparency with the markets, and the Fed deserves full marks for getting out the message of a December rate hike. This marked the first rise since December 2015 and only the second rate hike since 2008. In its rate statement, the Fed sounded positive about the economy, noting that the “labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year“. As well, the Fed revised upwards its forecast of US economic growth to 1.9% in 2016 and 2.1% in 2017, slightly higher than the Fed’s September estimates.

With the one rate hike in 2016 behind us, what’s next for the Fed? In September, Fed officials said they expected two rate hikes in 2017, but the Fed is now projecting three or even four hikes next year. However, projections can change based on economic conditions, and the markets haven’t forgotten that after the hike in December 2015, the Fed said it expected to raise rates four times in 2015, but ended up raising rates only once. As well, the wild card of Donald Trump could also play a critical role in monetary policy. Trump’s economic platform remains sketchy, apart from declarations that he will increase government spending and cut taxes. If Trump’s economic policies heat up the economy and boost inflation, we can expect a series of rate hikes starting early next year.

USD/CAD Fundamentals

Monday (December 19)

Tuesday (December 20)

*All release times are EST

*Key events are in bold

USD/CAD for Monday, December 19, 2016

USD/CAD December 19 at 7:00 EST

Open: 1.3340 High: 1.3371 Low: 1.3317 Close: 1.3368

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3026 1.3120 1.3253 1.3371 1.3457 1.3589

Further levels in both directions:

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Monday session. Currently, long positions have a majority (56%), indicative of trader bias towards USD/CAD 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

Latest posts by Kenny Fisher (see all [4])