USD/CAD – Canadian dollar steady as markets await Fed rate hike

The Canadian dollar is subdued in the Wednesday session. Currently, USD/CAD is trading at 1.3019, up 0.03% on the day. On the release front, there are no Canadian events. PPI is expected to rise to 0.3% and Core PPI is forecast to remain pegged at 0.2%. The Federal Reserve is expected to raise the benchmark rate by a quarter-point. On Thursday, the U.S will release retail sales reports and unemployment claims, and Canada publishes a housing inflation report.

It’s been a quiet day for the Canadian dollar, but that could change after the Federal Reserve meets on Wednesday. The Fed is widely expected to raise rates to a range between 1.75% and 2.0%. The odds of a quarter-point move stand at 96% percent, according to the CME Group. Although a rate hike has been priced in by the markets, such a significant move could boost the US dollar against its rivals. Investors are still uncertain whether the Fed will raise rates three or four times in 2018. Investors will be paying close attention to the rate statement and the “dot-plot” forecasts, looking for any clues regarding rate hikes in the second half of 2018. The Fed is currently projecting a total of three hikes this year, but a strong economy and rising inflation have raised speculation that the Fed could raise rates four times in 2018.

The Singapore Summit was a milestone, as it marked the first time that leaders of the United States and North Korea met face-to-face. However, the joint statement put out by Presidents Trump and Kim was short on details, which could explain a lack of movement in the currency markets following the summit. The joint statement reaffirmed North Korea’s full commitment to complete denuclearization, but there was no mention of a timetable or any verification mechanisms. Even if the summit was largely symbolic, there’s no denying that tensions have significantly eased and that the summit could mark a first step in bringing peace to the Korean peninsula.

USD/CAD Fundamentals

Wednesday (June 13)

  • 8:30 US PPI. Estimate 0.3%
  • 8:30 US Core PPI. Estimate 0.2%
  • 10:30 US Crude Oil Inventories. Estimate -1.4M
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.00%
  • 14:30 US FOMC Press Conference

Thursday (June 14)

  • 8:30 Canadian NHPI. Estimate 0.2%
  • 8:30 US Core Retail Sales. Estimate 0.5%
  • 8:30 US Retail Sales. Estimate 0.4%
  • 8:30 US Unemployment Claims. Estimate 223K

*All release times are DST

*Key events are in bold

USD/CAD for Wednesday, June 13, 2018

USD/CAD, June 13 at 8:15 DST

Open: 1.3014 High: 1.3046 Low: 1.3011 Close: 1.3019

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2850 1.2943 1.3015 1.3125 1.3224 1.3315

USD/CAD ticked higher in the Asian session and has posted slight gains in European trade.

  • 1.3015 is fluid. Currently, it is a weak support line
  • 1.3125 is the next resistance line
  • Current range: 1.3015 to 1.3125

Further levels in both directions:

  • Below: 1.3015, 1.2943, 1.2850 and 1.2757
  • Above: 1.3125, 1.3224 and 1.3315

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Wednesday session. Currently, long positions have a majority (63%), indicative of USD/CAD breaking out and moving higher.

    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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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