The Canadian dollar continues to show limited movement in the Thursday session. Early in the North American session, USD/CAD is trading at 1.2204, up 0.25% on the day. On the release front, inflation indicators are the focus on both sides of the border. In Canada, the New Housing Price Index gained 0.4%, above the forecast of 0.3%. Over in the US, CPI and Core CPI both improved in August. CPI gained 0.4%, edging above the forecast of 0.3%. Core CPI gained 0.2%, matching the forecast. There was more good news from the labor market, as unemployment claims fell to 284 thousand, well below the forecast of 303 thousand.
Early in the year, the Federal Reserve was full of optimism that a strong US economy would warrant three rate hikes during in 2017. The economy has generally performed well, but the US continues to grapple with weak inflation levels. A strong labor market has not helped push inflation higher, as wage growth remains soft. Fed policymakers have retreated from their earlier optimistic forecasts, and have been counseling caution and patience regarding rate increases. As for a December hike, the odds have been below 50% for months. Currently, the odds are pegged at 46%, which is an improvement from last week. However, the positive August CPI data could be a sign that at long last, inflation is moving in the right direction. If the markets feel this is the case, the odds of a December hike should increase.
The Canadian dollar has enjoyed an impressive run, as the currency has jumped 2.7% against the greenback in September. Oil prices have remained close to $50, and stronger economic growth led the BoC to raise the benchmark rate by 25 basis points last week, from 0.75% to 1.00%. The rate hike caught the markets by surprise, and sent USD/CAD down to a 2-year low. However, Canada is heavily reliant on its export sector, and the downside of a strong Canadian dollar is that it makes the country’s exports more expensive. Still, Canadian finance minister Bill Morneau said on Tuesday that he had no problem with a higher Canadian dollar, as a strong currency was reflective of a strong economy.
Thursday (September 14)
- 8:30 Canadian NHPI. Estimate 0.3%. Actual 0.4%
- 8:30 US CPI. Estimate 0.3%. Actual 0.4%
- 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
- 8:30 US Unemployment Claims. Estimate 303K. Actual 284K
Friday (September 15)
- 8:30 US Core Retail Sales. Estimate 0.5%
- 8:30 US Retail Sales. Estimate 0.1%
- 8:30 US Empire State Manufacturing Index. Estimate 18.2
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 95.1
*All release times are GMT
*Key events are in bold
USD/CAD for Thursday, September 14, 2017
USD/CAD Thursday, September 14 at 8:35 EDT
Open: 1.2174 High: 1.2239 Low: 1.2160 Close: 1.2204
USD/CAD has ticked higher in the Asian session and posted gains in the European session. The upward movement has continued early in the North American session.
- 1.2126 is providing support line
- 1.2218 is a weak resistance line
- Current range: 1.2126 to 1.2218
Further levels in both directions:
- Below: 1.2126, 1.1949, 1.1825, and 1.1673
- Above: 1.2218, 1.2302 and 1.2459
OANDA’s Open Positions Ratio
USD/CAD ratio is showing slight movement towards long positions. Currently, long positions have a strong majority (68%), indicative of trader bias towards USD/CAD continuing to move higher.