The Canadian dollar has shown little movement this week. Currently, USD/CAD is trading at 1.2852, down 0.22% on the day. On the release front, the US publishes Existing Home Sales and Canada releases Wholesale Sales. There are a host of key events on Thursday. Canada releases CPI and Core Retail Sales, and the US publishes Final GDP, the Philly Manufacturing Index and unemployment claims.
President Trump’s gift-wrapped Christmas present is ready – almost. The Trump tax reform bill was passed in the House of Representatives and the Senate on Tuesday, but the bill is being sent back to the House for another vote on Wednesday due to a procedural requirement. The bill is expected to be ratified by the House and will then be sent to Trump to be signed into law. As expected, the congressional votes went along party lines, with the Senate narrowly approving the bill by a count of 51-48. This marks the first major overhaul of the US tax code in 30 years, and reduces corporate taxes from 35% to 21%. After failing to overturn Obamacare, the Republicans can finally chalk up their first legislative victory in the Trump administration, ahead of Congressional elections in 2018.
The US economy has performed well in 2017, and this has boosted Canada’s economy as well. The US is expected to wrap up the year with a strong report card, with the release of Final GDP for Q3. The markets are forecasting a strong reading of 3.3%, which would be unchanged from the Preliminary GDP release. The Federal Reserve wrapped up 2017 with a quarter-point hike, and another increase is widely expected at the January meeting. Strong economic numbers and this accelerated pace of rate increases bodes well for the US dollar. If the GDP reading is wide of the estimate, we could see some movement from USD/CAD.
Wednesday (December 20)
- 8:30 Canadian Wholesale Sales. Estimate 0.5%
- 10:00 US Existing Home Sales. Estimate 5.53M
- 10:30 US Crude Oil Inventories. Estimate -3.6M
Thursday (December 21)
- 8:30 Canadian CPI. Estimate 0.2%
- 8:30 Canadian Core Retail Sales. Estimate 0.4%
- 8:30 US Final GDP. Estimate 3.3%
- 8:30 US Philly Fed Manufacturing Index. Estimate 21.5
- 8:30 US Unemployment Claims. Estimate 232K
*All release times are GMT
*Key events are in bold
USD/CAD for Wednesday, December 20, 2017
USD/CAD, December 20 at 8:05 EDT
Open: 1.2880 High: 1.2881 Low: 1.2850 Close: 1.2852
USD/CAD was flat in the Asian session and has posted slight losses in European trade
- 1.2757 is providing support
- 1.2860 has switched to a resistance role. It remains a weak line
- Current range: 1.2757 to 1.2860
Further levels in both directions:
- Below: 1.2757, 1.2630 and 1.2494
- Above: 1.2860, 1.3015, 1.3161 and 1.3260
OANDA’s Open Positions Ratio
USD/CAD ratio is unchanged in the Wednesday session. Currently, short positions have a majority (55%), indicative of trader bias towards USD/CAD breaking out and heading lower.