USD/CAD – Canadian dollar ticks lower, US consumer confidence next

The Canadian dollar is slightly lower in the Monday session. Currently, USD/CAD is trading at 1.3291, up 0.19% on the day. On the release front, there are no Canadian releases until Thursday. In the U.S, New Home Sales is expected to climb to 665 thousand. On Tuesday, the U.S releases CB Consumer Confidence.

Canadian consumer data was dismal on Friday, but the Canadian dollar managed to hold its own against the greenback. CPI in May slipped to a weak gain of 0.1%, missing the forecast of 0.4%. This marked a 5-month high. Consumer spending in April also missed expectations. Core retail sales declined 0.1%, well of the estimate of 0.5%. The indicator hasn’t posted a gain since January. Retail Sales declined 1.2%, compared to an estimate of 0.0%. This was its weakest reading since February 2016. Despite the soft numbers, the BoC remains confident about the economy, and a July rate hike remains a reasonable possibility. Inflation is still above the target of 2.0%, and in its the May policy statement the BoC removed its reference to “cautious”, replacing it with “gradual” describing its approach to rate adjustments. The markets viewed this as a signal that the bank is prepared to press the rate trigger in the second half of 2018. A rate hike would likely boost the Canadian dollar, as it makes the currency more attractive to investors.

The escalating trade dispute between the U.S. and its major trading partners remains a critical issue for global markets. The heads of central banks are concerned, and last week, Jerome Powell and Mario Draghi sounded gloomy about the repercussions that a trade war could have on economic growth and monetary policy. On Sunday, the Bank of International Settlements (BIS), also weighed in. The BIS acts as an umbrella group for some 60 central banks. The head of the BIS, Augustin Carstens, warned that recent protectionist moves could hamper global growth and financial stability, and could have negative side effects on the currency markets. At the same time, the BIS expressed support for the Federal Reserve raising interest rates gradually and for the ECB heading towards normalization as it winds up its massive asset program.

  China’s liquidity boost tempered by trade war jousting

  Trade continues to weigh at the start of the week

USD/CAD Fundamentals

Monday (June 25)

  • 10:00 US New Home Sales. Estimate 665K

Tuesday (June 26)

  • 10:00 US CB Consumer Confidence. Estimate 127.6

*All release times are DST

*Key events are in bold

USD/CAD for Monday, June 25, 2018

USD/CAD, June 25 at 8:50 DST

Open: 1.3266 High: 1.3316 Low: 1.3266 Close: 1.3293

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.3067 1.3160 1.3292 1.3436 1.3550 1.3637

USD/CAD has edged higher in the Asian session and is choppy in European trade

  • 1.3292 is fluid. Currently, it is a weak support line
  • 1.3436 is the next resistance line
  • Current range: 1.3292 to 1.3436

Further levels in both directions:

  • Below: 1.3292, 1.3160, 1.3067 and 1.2970
  • Above: 1.3436, 1.3530 and 1.3637

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.