USD/CAD – Lack of data leaves Canadian dollar slightly lower

The Canadian dollar is showing little movement in the Monday session. Currently, USD/CAD is trading at 1.3071, up 0.07% on the day. In economic news, there are no data releases on either side of the border. On Tuesday, Canada releases Wholesale Sales.

The Canadian dollar ended the week with strong gains, climbing 0.07 percent. The boost to the currency came from a strong CPI report, with a gain of 0.5%. This easily beat the estimate of 0.1% and marked a 5-month high. On an annualized basis, CPI jumped 3.0%, its highest level since 2011. The strong inflation report has raised expectations that the Bank of Canada will raise rates at the September meeting. The likelihood of a quarter-rate hike next month is only 33%, but this rises to 75% for an October hike, if the BoC stays on the sideline next month.

After months of an escalating trade war between the U.S and China, the markets are hoping that talks between the sides will reduce tensions. The two economic giants will hold low-level trade talks this week in Washington, and although a dramatic breakthrough is unlikely, the fact that the two sides are talking has investors cheering. The U.S is unhappy with the Chinese protection of local markets and technology transfers required in order for U.S businesses to operate in China, but it’s questionable if the Chinese will show much flexibility. Both sides have slapped tariffs of $34 billion on each other’s products, with another $16 billion in tariffs scheduled for August 23. If the negotiations lead to the suspension of the upcoming tariffs, risk appetite would rise and likely give a boost to the Canadian dollar.

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USD/CAD Fundamentals

Monday (August 20)

• 9:15 BOC Senior Deputy Governor Carolyn Wilkins Speaks
• 11:00 US FOMC Member Rafael Bostic Speaks

Tuesday (August 21)

• 8:30 Canadian Wholesale Sales

*All release times are DST

*Key events are in bold

USD/CAD for Monday, August 20, 2018

USD/CAD, August 20 at 8:25 DST

Open: 1.3061 High: 1.3084 Low: 1.3054 Close: 1.3088

USD/CAD Technical

USD/CAD inched higher in the Asian session. The pair is showing little movement in European trade

• 1.3067 is fluid. Currently, it is providing weak support
• 1.3160 is the next resistance line
• Current range: 1.3067 to 1.3160

Further levels in both directions:

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

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