USD/CAD – Canadian dollar unchanged ahead of GDP

The Canadian dollar is showing little movement in the Tuesday session. Currently, USD/CAD is trading at 1.3042, up 0.05% on the day. On the release front, Canada releases its monthly GDP report, which is expected to rise to 0.3%. Canadian Raw Materials Price Index is forecast to drop to 2.7%. The U.S will release consumer inflation and spending reports. As well, CB Consumer Confidence is expected to tick up to 126.5 points. On Wednesday, the Federal Reserve will release a rate statement.

The U.S economy continues to hum in the second quarter. Advance GDP for Q2, the first of three GDP reports, posted a sparkling 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. 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 are able to reach a new agreement, the Canadian dollar would likely move higher.

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USD/CAD Fundamentals

Tuesday (July 31)

  • 8:30 Canadian GDP. Estimate 0.3%
  • 8:30 Canadian RMPI. Estimate 2.7%
  • 8:30 Canadian IPPI. Estimate 0.3%
  • 8:30 US Core PCE Price Index. Estimate 0.1%
  • 8:30 US Personal Spending. Estimate 0.4%
  • 8:30 US Employment Cost Index. Estimate 0.7%
  • 8:30 US Personal Income. Estimate 0.4%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.4%
  • 9:45 Chicago PMI. Estimate 61.9
  • 10:00 US CB Consumer Confidence. Estimate 126.5

Wednesday (August 1)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 186K
  • 10:00 US ISM Manufacturing PMI. Estimate 59.4
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.00%

*All release times are DST

*Key events are in bold

 

USD/CAD for Tuesday, July 31, 2018

USD/CAD, July 31 at 7:30 DST

Open: 1.3035 High: 1.3096 Low: 1.3023 Close: 1.3047

 

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.