USD/CAD – Canadian dollar unchanged ahead of Fed rate statement

The Canadian dollar is trading sideways in the Wednesday session. Currently, USD/CAD is trading at 1.2957, up 0.04% on the day. On the release front, there are no Canadian events. In the U.S, the focus is on the Federal Reserve, which is virtually certain to raise the benchmark rate to a range between 2.00% and 2.25%. On Thursday, the U.S will publish Final GDP and durable goods orders.

On Friday, Canadian CPI dipped from 3.0% to 2.8% in August, posting a rare decline. Still, inflation remains well above the BoC target of 2.0%. The markets are leaning heavily towards a rate hike in October, which would raise the benchmark rate to 1.75%. BoC Governor Stephen Poloz will deliver a speech and hold a press conference, and investors will be looking for hints regarding monetary policy. With the U.S poised to raise rates on Wednesday and another rate hike likely in December, the BoC will be under pressure to follow the Fed’s lead and raise rates at least one more time this year.

All eyes are on the Federal Reserve, which is widely expected to raise rates by 25 basis points at the conclusion of its policy meeting on Wednesday. What will be the tone of the rate statement? The U.S economy is in excellent shape, with GDP for Q2 expected at 4.2%, and unemployment hovering below 4 percent. However, the escalating global trade war has raised concerns that it could cool down global economic growth and hurt the U.S economy as well. Still, another rate hike in December is pegged at 78% according to the CME, and some experts are predicting up to four rate hikes in 2019.

Decision Day : The FOMC looms

US Dollar steadies ahead of FOMC decision

Look to Fed’s Powell for help

USD/CAD Fundamentals

Wednesday (September 26)

  • 10:00 US New Home Sales. Estimate 630K
  • 10:30 US Crude Oil Inventories. Actual -0.7M
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.25%
  • 14:30 FOMC Press Conference

Thursday (September 27)

  • 8:30 US Core Durable Goods Orders. Estimate 0.4%
  • 8:30 US Final GDP. Estimate 4.2%
  • 8:30 US Durable Goods Orders. Estimate 1.9%
  • 16:30 US Fed Chair Powell Speaks
  • 17:45 BoC Stephen Poloz Speaks

*All release times are DST

*Key events are in bold

USD/CAD for Wednesday, September 26, 2018

USD/CAD, September 26 at 7:25 DST

Open: 1.2953 High: 1.2964 Low: 1.2945 Close: 1.2957

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2515 1.2666 1.2830 1.2970 1.3067 1.3160

USD/CAD ticked higher in the Asian session but retracted. This trend has repeated itself in European trade

  • 1.2830 is providing support
  • 1.2970 remains a weak resistance line
  • Current range: 1.2830 to 1.2970

Further levels in both directions:

  • Below: 1.2830, 1.2666 and 1.2515
  • Above: 1.2970, 1.3067, 1.3160 and 1.3292

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.