The Canadian dollar has shown little movement this week. Currently, USD/CAD is trading at 1.2865, up 0.02% on the day. On the release front, there are no Canadian events on the schedule. In the US, today’s key event is Building Permits, which is expected to slow to 1.25 million. We’ll also get a look at Current Account and Housing Starts. On Wednesday, the US publishes Existing Home Sales and Canada releases Wholesale Sales.
President Trump fared badly when he tried to replace Obamacare, but his tax reform proposal is poised to become law, barring any unexpected surprises. On Friday, the legislation passed a major milestone, as the House and Senate hammered out the differences in their tax proposals and drafted a uniform bill. The legislation is expected to be voted on in the House on Tuesday and the Senate on Wednesday. With Democrats in both branches opposing tax reform, the Republicans will need every vote in the Senate, where they have a thin 59-41 majority. Several Republican senators who were undecided have said they will vote in favor, so the bill is likely to pass through Congress and will then be signed into law by President Trump. This marks the first major overhaul of the US tax code in 30 years, and would represent a huge victory for Trump, ahead of Congressional elections in 2018.
Bank of Canada Governor Stephen Poloz presented an optimistic picture of the economy last week, but also acknowledged that the BoC has some significant concerns as we wrap up 2017. With the Federal Reserve raising rates last week, and almost certain to do so again at the January meeting, the BoC is under pressure to increase rates early in 2018, or else the Canadian dollar could take a tumble. Another headache for the Poloz is NAFTA, as the US has threatened to pull out of the free-trade agreement if Canada and Mexico do not agree to major concessions. If NAFTA does unravel, the Canadian dollar would likely drop, as Canada sends 75% of its export to its southern neighbor and the economic repercussions would be severe.
Tuesday (December 19)
- 8:30 US Building Permits. Estimate 1.27M
- 8:30 US Current Account. Estimate -116B
- 8:30 US Housing Starts. Estimate 1.25M
- Tentative – US FOMC Member Neel Kashkari Speaks
Wednesday (December 20)
- 8:30 Canadian Wholesale Sales. Estimate 0.5%
- 10:00 US Existing Home Sales. Estimate 5.53M
*All release times are GMT
*Key events are in bold
USD/CAD for Tuesday, December 19, 2017
USD/CAD, December 19 at 8:05 EDT
Open: 1.2862 High: 1.2877 Low: 1.2850 Close: 1.2865
USD/CAD has shown little movement in the Asian and European sessions
- 1.2860 remains under pressure in support
- 1.3015 is the next resistance line. It has held firm since early July
- Current range: 1.2860 to 1.3015
Further levels in both directions:
- Below: 1.2860, 1.2757, 1.2630 and 1.2494
- Above: 1.3015, 1.3161 and 1.3260
OANDA’s Open Positions Ratio
In the Tuesday session, USD/CAD ratio is showing movement towards short positions. Currently, short positions have a majority (55%), indicative of trader bias towards USD/CAD breaking out and heading lower.