The Canadian dollar has gained ground in the Wednesday session, recovering most of the losses from Tuesday. Currently, USD/CAD is trading at 1.2731, down 0.36% on the day. On the release front, the focus is on Canadian housing data. Housing Starts is expected to slip to 211 thousand, while the markets are forecasting a strong rebound for Building Permits, with an estimate of 0.7%. On Thursday, Canada releases the New Housing Price Index, while the US will publish unemployment claims.
The Canadian dollar received a boost from BoC Governor Stephen Poloz on Tuesday, after Poloz maintained a neutral stance towards interest rates. Poloz said that the Bank continued to monitor how the economy was doing after rate hikes in July and September. The markets were caught off guard by the September move, and the Canadian dollar responded with strong gains. Poloz did not offer any insight as to future rate hikes, leaving the markets guessing regarding a December rate hike. Poloz added that he was not concerned that inflation remains below the BoC’s target of 2 percent. The BoC will have to keep a close eye on the US, as the Federal Reserve is almost certain to raise rates in December. If the BoC does not match the hike, the Canadian dollar will likely weaken against the greenback.
US President Trump is off in Asia, but there is plenty of activity in Congress. After failing to pass a new healthcare act, President Trump has his sights set on tax reform, a key item in his domestic platform. Trump wants Congress to pass legislation overhauling the tax code before the end of the year, but that could prove to be too tight of a deadline. Most Democrats have come out against the proposal, and not all Republicans are on board. The bill would cut corporate taxes from 35% to 20%, but predictably, Democrat and Republican lawmakers are at odds as to whether the bill will lower taxes for the middle class. The bill is presently being debated in a congressional committee and is expected to move to the House floor next week. The Senate will present its version of the bill on Thursday, so we can expect plenty of activity in Congress in the next few weeks. Expectations that Trump will cut taxes has been the catalyst for a stock market rally over the past year, and if the bill does become law, the US dollar will likely gain ground.
Wednesday (November 8)
- 8:15 Canadian Housing Starts. Estimate 211K
- 8:30 Canadian Building Permits. Estimate 0.7%
- 10:30 US Crude Oil Inventories. Estimate -2.5M
- 13:01 US 10-year Bond Auction
Thursday (November 9)
- 8:30 Canadian NHPI. Estimate 0.2%
- 8:30 US Unemployment Claims. Estimate 232K
- 10:00 US Final Wholesales Inventories. Estimate 0.3%
- 10:30 US Natural Gas Storage. Estimate 15B
- 13:01 US 30-year Bond Auction
*All release times are GMT
*Key events are in bold
USD/CAD for Wednesday, November 8, 2017
USD/CAD, November 8 at 7:55 EDT
Open: 1.2777 High: 1.2780 Low: 1.2737 Close: 1.2731
USD/CAD was flat in the Asian session and has lost ground in European trade
- 1.2701 is providing support. This line could be tested in the North American session
- 1.2778 is the next resistance line
- Current range: 1.2701 to 1.2778
Further levels in both directions:
- Below: 1.2701, 1.2598 and 1.2441
- Above: 1.2778, 1.2943, 1.3032 and 1.3126
OANDA’s Open Positions Ratio
USD/CAD ratio is unchanged this week. Currently, long and short positions are almost evenly split, indicative of a lack of trader bias as to what direction USD/CAD takes next.