USD/CAD – Canadian Dollar Subdued Ahead of Fed Minutes

The Canadian dollar has recorded slight losses in the Wednesday session. Currently, USD/CAD is trading at 1.2669, up 0.16% on the day. On the release front, there are no Canadian releases on the schedule. In the US, the key event is the Federal Reserve minutes from the January meeting. We’ll also get a look at Existing Home Sales, which are expected to climb to 5.61 million. On Thursday, Canada releases retail sales reports and the US will publish unemployment claims.

The week started on a sour note for Canadian indicators, as Wholesales Sales declined 0.5%, short of the estimate of 0.4%. It marked the first decline in three months. The markets are expecting another soft release from Core Retail Sales, a key barometer of consumer spending. The indicator posted a strong gain of 1.6% in December, but is forecast to slow to just 0.1% in January. If consumer spending posts a weak reading, the Canadian dollar could lose more ground. The pair is under pressure, and has shed 1.0% so far this month.

It has been an eventful few weeks for Jerome Powell, who has just commenced his stint as chair of the Federal Reserve. Strong US data in recent weeks has raised speculation that the Fed may need to accelerate the pace of interest rate hikes in 2018. The Fed is currently projecting three rate hikes this year, but if inflation continues to move upwards, many analysts are expecting that the Fed could press the rate trigger four, or even five times in 2018. Meanwhile, concern over higher inflation and more rate hikes sent the stock markets into a frenzy earlier in February. Powell sought to reassure the markets that the Fed was monitoring the situation, but it’s doubtful that the Fed can do much to prevent volatility in the markets.

USD/CAD Fundamentals

Wednesday (February 21)

  • 9:45 US Flash Manufacturing PMI. Estimate 55.4
  • 9:45 US Flash Services PMI. Estimate 53.8
  • 10:00 US Existing Home Sales. Estimate 5.61M
  • 14:00 US FOMC Meeting Minutes

Thursday (February 22)

  • 8:30 Canadian Core Retail Sales. Estimate 0.1%
  • 8:30 Canadian Retail Sales. Estimate 0.0%

*All release times are GMT

*Key events are in bold

USD/CAD for Wednesday, February 21, 2018

USD/CAD, February 21 at 7:40 EST

Open: 1.2548 High: 1.2671 Low: 1.2640 Close: 1.2669

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2351 1.2494 1.2630 1.2757 1.2855 1.2920

USD/CAD has posted small gains in the Asian and European sessions

  • 1.2494 is providing support
  • 1.2630 is a weak resistance line
  • Current range: 1.2494 to 1.2630

Further levels in both directions:

  • Below: 1.2630, 1.2494, 1.2351 and 1.2190
  • Above: 1.2757, 1.2855 and 1.2920

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little movement in the Wednesday session. Currently, short positions have a slender majority (52%), indicative of slight trader bias towards USD/CAD reversing directions and moving lower.

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.