USD/CAD – Canadian dollar dips, U.S GDP Matches Estimate

The Canadian dollar has posted losses on Thursday, continuing the upward movement which marked the Wednesday session. Currently, USD/CAD is trading at 1.3060, up 0.31% on the day. In the U.S, there were a host of releases. Final GDP in Q2 matched the estimate, with a gain of 4.2%. Core durable goods orders jumped 4.5%, crushing the estimate of 1.9%. However, durable goods orders came in at 0.1%, missing the forecast of 0.4%. Unemployment claims climbed to 214 thousand, above the estimate of 208 thousand. There are no data releases in Canada. On Friday, Canada releases monthly GDP and inflation indicators. The U.S will publish Personal Spending and UoM Consumer Sentiment.

As widely expected, the Federal Reserve pressed that rate trigger for the third time this year, raising the benchmark rate by a quarter-point, to a range of 2 percent to 2.25 percent. The Fed intends to continue gradually raising rates, with another rate hike expected in December and three hikes in 2019. What was of more interest to investors was the rate statement, in which the Fed removed the word ‘accommodative’ in the statement, which means that the Fed now considers monetary policy to be neutral. Fed Chair Jerome Powell, in a bid to keep markets calm, stated in a follow-up press conference that removing accommodative language in the statement did not reflect a change in policy. Still, the markets were upbeat after the Fed meeting and the U.S dollar has responded with gains against the Canadian dollar on Thursday.

With the U.S raising rates on Wednesday and more to follow, the BoC will be under pressure to follow the Fed’s lead and raise rates at least one more time this year. 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 later on Thursday, and investors will be looking for hints regarding monetary policy. If Poloz sends a bullish message to the markets, the Canadian dollar could gain ground.

Euro tumbles on talk Italy to delay budget meeting

Gold rises after limited impact from Fed hike

USD/CAD Fundamentals

Thursday (September 27)

• 8:30 US Core Durable Goods Orders. Estimate 0.4%. Actual 0.1%
• 8:30 US Final GDP. Estimate 4.2%. Actual 4.2%
• 8:30 US Durable Goods Orders. Estimate 1.9%. Actual 4.5%
• 8:30 US Final GDP Price Index. Estimate 3.0%. Actual 3.0%
• 8:30 US Goods Trade Balance. Estimate -70.6B. Actual -75.8B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.3%. Actual 0.8%
• 8:30 US Unemployment Claims. Estimate 208K. Actual 214K
• 9:30 ECB President Draghi Speaks
• 10:00 US Pending Home Sales. Estimate -0.2%
• 10:30 US Natural Gas Storage. Estimate 64B
• 16:30 US Fed Chair Powell Speaks
• 17:45 BoC Governor Poloz Speaks

Friday (September 28)

• 8:30 Canadian GDP. Estimate 0.1%
• 8:30 Canadian RMPI. Estimate 0.8%
• 8:30 US Personal Spending. Estimate 0.3%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 100.5

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, September 27, 2018

USD/CAD, September 27 at 8:05 DST

Open: 1.3020 High: 1.3065 Low: 1.3015 Close: 1.3060

USD/CAD Technical

USD/CAD has posted slight gains in the Asian and European sessions

• 1.2970 is a support level
• 1.3067 is under pressure in resistance
• 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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