The Canadian dollar has posted small gains in the Wednesday session. In North American trade, USD/CAD is trading at 1.3019, down 0.16% on the day. In economic news, Canadian retail sales and core retail sales both posted declines, missing expectations. Later on, the U.S releases Existing Homes and the Federal Reserve will publish the minutes of the July policy meeting.
Canadian retail sales data for June was within expectations but nonetheless disappointed. Core Retail Sales declined 0.1%, after a strong 1.4% gain in May. This matched the estimate. Retail Sales dropped 0.2%, compared to a gain of 2.0% a month earlier. This missed the estimate of -0.1%.
All eyes are on the Federal Reserve, which publishes the minutes of its meeting from August 1. The Fed statement from that meeting described the economy as “strong”, the first time it used that term since 2006. Fed policymakers reiterated their commitment to raise interest rates gradually, as economic conditions remain strong. In the second quarter, GDP grew 4.1%, inflation has moved closer to the Fed’s target of 2%, and unemployment remains at record lows. The minutes are expected to underscore the Fed’s intent to raise rates twice more this year, in September and December. The Fed’s approach to rate hikes appears economically sound, but enter the undiplomatic President Trump, who has criticized the Fed, saying he was “not thrilled” with higher rates. Still, the Fed is widely expected to raise rates twice more this year, in September and December.
Central banks will be in market focus for the remainder of the week. On the heels of the release of the Fed minutes, the heads of the central bank will gather in picturesque Jackson Hole on Thursday. Investors will be keenly following, looking for hints regarding future monetary policy on the part of the ECB and the Federal Reserve. The U.S economy continues to show strong growth but inflation and wage growth continue to lag, and Fed chair Jerome Powell will be expected to address these issues.
Wednesday (August 22)
- 8:30 Canadian Core Retail Sales. Estimate -0.1%. Actual -0.1%
- 8:30 Canadian Retail Sales. Estimate -0.1%. Actual -0.2%
- 10:00 US Existing Home Sales. Estimate 5.44M
- 10:30 US Crude Oil Inventories. Estimate -1.6M
- 14:00 US FOMC Meeting Minutes
Thursday (August 23)
- 8:30 Canadian Corporate Profits
- 8:30 US Unemployment Claims 215K
- Day 1 – Jackson Hole Symposium
*All release times are DST
*Key events are in bold
USD/CAD for Wednesday, August 22, 2018
USD/CAD, August 22 at 9:10 DST
Open: 1.3039 High: 1.3047 Low: 1.3007 Close: 1.3019
USD/CAD was flat for most of the Asian session. In European trade, the pair
- 1.2970 is a support level
- 1.3067 is the next resistance 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
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