USD/CAD – Canadian dollar dips, US consumer confidence next

The Canadian dollar has posted losses in the Friday session, erasing the gains from the Thursday session. Currently, USD/CAD is trading at 1.3197, up 0.31% on the day. There are no Canadian releases on the schedule. In the U.S, the key event is UoM Consumer Sentiment, which is expected to dip to 98.1 points.

Federal Reserve Chair Jerome Powell gave the U.S economy a solid report card on Thursday. In a radio interview, Powell said that the economy is “in a really good place”, pointing to President Trump’s massive tax cut scheme and increased spending as key factors in boosting economic growth. Powell did not address monetary policy and said he was uncertain as to the effects of the current trade disputes which has embroiled the U.S and its trading partners. The Fed will likely press the rate trigger in the second half of the year, but it is an open question as to whether we’ll see one hike over the next six months. The Fed is projecting growth of 2.8% in 2018, compared to 2.3% in 2017. Powell will be in the spotlight next week when he appears for his semi-annual testimony before Congress.

After weeks of hints, the Bank of Canada pressed the rate trigger on Wednesday. The hike of 25 basis points raised the benchmark rate to 1.50%, its highest level since December 2008. The Bank followed up with a hawkish rate statement, as policymakers noted that the economy continues to operate close to capacity. The BoC has upwardly revised its growth forecast for Q2 from 2.5% to 2.8%, and projected inflation to climb to 2.5%, before falling to 2% in the second half of 2019. As for the escalating trade war, the BoC said that U.S tariffs on steel and aluminum and retaliatory tariffs by Canada would lower economic growth. However, the effect of the tariffs would be modest, due to strong global demand and high commodity prices. Despite the rate hike and hawkish comments from the BoC, the Canadian dollar lost ground against the greenback on Wednesday.

  The sky hasn’t fallen just yet

  First signs of tariffs impact in China’s June trade numbers

Friday (July 13)

  • 8:30 US Import Prices. Estimate 0.1%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.1
  • 10:00 US Preliminary UoM Inflation Expectations
  • 11:00 US Fed Monetary Policy Report

*All release times are DST

*Key events are in bold

 

USD/CAD for Friday, July 13, 2018

USD/CAD, July 13 at 6:55 DST

Open: 1.3155 High: 1.3205 Low: 1.3152 Close: 1.3197

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2970 1.3067 1.3160 1.3292 1.3436 1.3530

In the Asian session, USD/CAD ticked lower but then recovered. The pair has edged higher in European trade

  • 1.3160 is providing support
  • 1.3292 is the next line of resistance
  • Current range: 1.3160 to 1.3292

Further levels in both directions:

  • Below: 1.3160, 1.3067, 1.2970 and 1.2831
  • Above: 1.3292, 1.3436 and 1.3530

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.