The Canadian dollar continues to have an uneventful week. In the Wednesday session, USD/CAD is trading at 1.2523, up 0.02% on the day. We could see some movement from the pair in the North American session, as Canada releases Manufacturing Sales. The markets are braced for a third straight decline, with an estimate of -0.1%. The US will release two key housing indicators. Building Permits is expected to slow to 1.25 million, and Housing Starts are forecast to remain unchanged at 1.18 million. On Thursday, the US releases unemployment claims and the Philly Fed Manufacturing Index.
With the Canadian economy performing well, could another rate hike be in the cards? The Bank of Canada surprised with a rate hike in September, but policymakers are concerned over tensions about NAFTA. Talks between Canada, the US and Mexico over re-negotiating NAFTA have floundered, raising the possibility that Donald Trump will scrap the agreement. The BoC would prefer not to raise rates until the NAFTA negotiations are settled. However, the Federal Reserve is widely expected to raise rates in December and the BoC will be under pressure to follow suit and protect the Canadian dollar.
With the Federal Reserve dropping strong hints that it will raise rates in December, the odds of a December hike are currently at a sizzling 91 percent. Just one month ago, the odds were 50-50 that the Fed would raise rates at the December meeting. Low inflation levels have been a key reason that the Fed has been reluctant to raise rates, but Fed Chair Janet Yellen and other policymakers have expressed optimism that inflation will move closer towards the Fed’s inflation target of 2 percent. The markets will be looking for some clues about the Fed’s rate plans, as FOMC members William Dudley and Robert Kaplan speak on Wednesday.
Wednesday (October 18)
- 8:00 US FOMC Member William Dudley Speaks
- 8:00 US FOMC Robert Kaplan Speaks
- 8:30 US Building Permits. Estimate 1.25M
- 8:30 Canadian Manufacturing Sales. Estimate -0.1%
- 8:30 US Housing Starts. Estimate 1.18M
- 10:30 US Crude Oil Inventories. Estimate -4.7M
- 14:00 US Beige Book
- 15:30 BoC Senior Deputy Governor Carolyn Wilkins Speaks
- Tentative – US Federal Budget Balance. Estimate -0.9B
Thursday (October 19)
- 8:30 US Unemployment Claims. Estimate 240K
- 8:30 US Philly Fed Manufacturing Index. Estimate 21.9
*All release times are GMT
*Key events are in bold
USD/CAD for Wednesday, October 18, 2017
USD/CAD Tuesday, October 18 at 6:50 EDT
Open: 1.2520 High: 1.2534 Low: 1.2488 Close: 1.2523
USD/CAD edged lower in the Asian session but has recovered in European trade
- 1.2459 is providing support
- 1.2598 is the next resistance line
- Current range: 1.2459 to 1.2598
Further levels in both directions:
- Below: 1.2459, 1.2302 and 1.2218
- Above: 1.2598, 1.2701 and 1.2778
OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged in the Wednesday session. Currently, long positions have a majority (60%), indicative of trader bias towards USD/CAD breaking out and moving to higher ground.
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.