USD/CAD – Canadian dollar trading sideways, GDP ahead

The Canadian dollar is showing little movement in the Monday session. Currently, USD/CAD is trading at 1.3047, down 0.06% on the day. There are no Canadian indicators on the schedule. In the U.S, Pending Home Sales is forecast to rebound with a gain of 0.4%, after two straight declines. Tuesday will be busy on both sides of the border. The U.S will publish consumer spending and inflation indicators, as well as CB Consumer Confidence. Canada will release GDP for the second quarter and the Raw Materials Price Index.

U.S indicators ended the week on a bright note, but the Canadian dollar held its own on Friday against the strong U.S currency. Advance GDP, the first of three GDP reports in the second quarter, posted a strong gain of 4.1%, just shy of the forecast of 4.2%. This was much stronger than the gain of 2.2% in Q1 and marked the strongest quarter of economic growth since 2014. As well, UoM Consumer Sentiment dipped lower to 97.9 but still beat the estimate of 97.1 points. President Trump took credit for the strong GDP report and claimed that “these numbers are very, very sustainable”. However, analysts are being more cautious in their forecasts, calling for growth in the third quarter of around 2.5 percent.

Negotiations over NAFTA have progressed slowly, but policymakers in Canada and Mexico are hopeful that the flexibility that the U.S has shown towards the European Union will extend to NAFTA as well. Last week, President Trump met with EU Commission President Jean-Claude Juckner and announced that the U.S would hold off any further tariffs while the sides were negotiating. Will this goodwill extend to NAFTA as well? The U.S has insisted on far-reaching changes to the pact, including its renegotiation in five years and higher U.S content in automobiles produced in North America. If its demands aren’t met, the Trump administration has said it could pursue separate free trade agreements with Canada and Mexico. However, the latter two countries would like to maintain a trilateral arrangement. If the parties do reach a new agreement, the Canadian dollar would likely move higher.

  Dollar marks time in Asia as traders consider a busy data week

  G7 FX moves look to central banks for direction

 

Monday (July 30)

  • 10:00 US Pending Home Sales. Estimate 0.4%
  • Tentative – US Loan Officer Survey

Tuesday (July 31)

  • 8:30 Canadian GDP. Estimate 0.3%
  • 8:30 Canadian RMPI. Estimate 2.7%
  • 8:30 US Core PCE Price Index. Estimate 0.1%
  • 8:30 US Personal Spending. Estimate 0.4%
  • 10:00 US CB Consumer Confidence. Estimate 126.5

*All release times are DST

*Key events are in bold

 

USD/CAD for Monday, July 30, 2018

USD/CAD, July 30 at 8:30 DST

Open: 1.3055 High: 1.3079 Low: 1.3039 Close: 1.3050

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2733 12831 1.2970 1.3067 1.3160 1.3292

USD/CAD ticked higher in Asian trade and has retracted in the European session

  • 1.2970 is providing support
  • 1.3067 was tested earlier in resistance and is a weak line
  • Current range: 1.2970 to 1.3067

Further levels in both directions:

  • Below: 1.2970, 1.2831 and 1.2733
  • Above: 1.3067, 1.3160, 1.3292 and 1.3436

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.