USD/CAD – Canadian Dollar Steady Ahead of Canadian Budget and Powell Testimony

The Canadian dollar has recorded small gains in the Tuesday session. Currently, USD/CAD is trading at 1.2703, up 0.13% on the day. On the release front, the sole Canadian event is the annual budget. In the US, it’s a busy day. Core Durable Goods Orders are forecast to dip to 0.4%, and Durable Goods Orders are expected to decline 2.4%. Another key release is CB Consumer Confidence, which is expected to climb to 126.2 points. As well, Jerome Powell will testify before a congressional committee.

It’s budget day for Ottawa, and the markets are not expecting any bombshells from finance minister Bill Morneau. In October, the Trudeau government revised downwards the deficit for the 2017-2018 fiscal year to C$19.9 billion. The Canadian economy was steady in the fourth quarter, so the deficit could be even lower. The budget is not expected to show any major spending, so it’s likely that the release will not shake up the Canadian dollar. The Canadian currency lost ground last week, and touched its lowest level since late December.

All eyes are on Federal Reserve Chair Jerome Powell, who took over from Janet Yellen earlier this month. Powell will testify before the House Financial Services Committee, his first major appearance as head of the central bank. Powell received a rude welcome from the markets just after moving into his new office, as the global stock market correction erased some $4 trillion in valuations. The volatility forced Powell to make a public statement, reassuring the markets that the Fed was closely monitoring the situation.

How will the US dollar react to Powell’s testimony before the House Finance Services Committee? After the recent turmoil in the stock markets, Powell may opt to play it safe and keep away from any splashy headlines, which could lead to more fluctuation in the markets. Powell could choose to focus on the strong US economy and the Fed trimming its balance sheet, and steer away from a discussion of accelerating rate policy in order to head off higher inflation.

Will Dollar Rally or Fade on Fed Powell’s Comments?

USD/CAD Fundamentals

Tuesday (February 27)

  • 8:30 US Core Durable Goods Orders. Estimate 0.4%
  • 8:30 US Fed Chair Jerome Powell Testifies
  • 8:30 US Durable Goods Orders. Estimate -2.4%
  • 8:30 US Goods Trade Balance. Estimate -72.3B
  • 8:30 US Preliminary Wholesale Inventories. Estimate 0.3%
  • 9:00 US HPI. Estimate 0.4%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.3%
  • 10:00 US CB Consumer Confidence. Estimate 126.2
  • 10:00 US Richmond Manufacturing Index. Estimate 15
  • 16:00 Canadian Annual Budget

*All release times are GMT

*Key events are in bold

USD/CAD for Tuesday, February 27, 2018

USD/CAD, February 27 at 8:00 EST

Open: 1.2686 High: 1.2706 Low: 1.2669 Close: 1.2703

 

USD/CAD Technical

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

USD/CAD showed little movement in the Asian session and has posted slight gains in the European session

  • 1.2630 is providing support
  • 1.2757 is the next resistance line
  • Current range: 1.2630 to 1.2757

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 unchanged in the Tuesday 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.