USD/CAD – Canadian dollar gains ground, U.S GDP next

The Canadian dollar has posted losses in the Thursday session. Currently, USD/CAD is trading at 1.3289, down 0.40% on the day. On the release front, there are no Canadian events. In the U.S, Final GDP is forecast at 2.2%, identical to the reading of Preliminary GDP in May. As well, unemployment claims is expected to edge up to 220 thousand. On Friday, Germany releases retail sales and the eurozone publishes CPI reports. The U.S will publish consumer spending and inflation data, as well as consumer confidence.

Will he or won’t he? Investors are keeping a close eye on the Bank of Canada, which holds a policy meeting on July 11. The bank has strongly hinted that a rate hike could be coming soon. On Wednesday, BoC Governor Stephen Poloz had a hawkish message for the markets, noting that inflation was on target and the domestic economy was performing well. However, Poloz also mentioned that the trade war between Canada and the U.S was hurting business investment. Currently, the likelihood of a rate hike in July is 55 percent. Canadian economic data in the next two weeks will likely be the determining factor as to whether the BoC presses the rate trigger, or opts to wait until later in the year.

As the second quarter draws to a close, the U.S economy continues to perform well. Economic growth has been strong and the labor market is close to capacity. However, the trade war between the U.S and its major partners could be the dark cloud on the horizon. The Federal Reserve now plans to raise rates four times in 2018 (up from three), but a global trade war could force the Fed to revise its forecast back to three hikes. On Tuesday, Atlanta Fed bank president Raphael Bostic said that if the trade war intensified, he would vote against a fourth rate hike, due to downside risks to the economy. Fed Chair Jerome Powell sounded pessimistic about the economic effects of trade tensions at an ECB forum earlier in June, and if other Fed members express concerns, the Fed could delay a fourth hike until 2019.

  Confusion reigns supreme

  Markets remain under pressure on trade concerns

  Dollar rises to new heights against G10 and EM pairs

USD/CAD Fundamentals

Thursday (June 28)

  • 8:30 US Final GDP. Estimate 2.2%
  • 8:30 US Unemployment Claims. Estimate 220K
  • 8:30 US Final GDP Price Index. Estimate 1.9%
  • 10:30 US Natural Gas Storage. Estimate 73B
  • 12:00 US FOMC Member Bostic Speaks

Friday (June 29)

  • 8:30 Canadian GDP. Estimate 0.0%
  • 8:30 Canadian Raw Materials Price Index. Estimate 1.2%
  • 8:30 US Core PCE Price Index. Estimate 0.2%
  • 8:30 US Core Personal Spending. Estimate 0.4%
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 99.1

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, June 28, 2018

USD/CAD, June 28 at 8:05 DST

Open: 1.3342 High: 1.3352 Low: 1.3274 Close: 1.3292

USD/CAD Technical

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

USD/CAD was flat in the Asian session and has posted losses in European trade

  • 1.3292 remains a weak support line, It could break in the North American session
  • 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.