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USD/CAD – Canadian dollar steady as BoC expected to stand pat

The Canadian dollar has ticked higher in the Wednesday session, after considerable gains on Tuesday. Currently, USD/CAD is trading at 1.3278, up 0.10% on the day. On the release front, the Bank of Canada will set the benchmark rate at its policy meeting. There are no major events in the United States. On Thursday, it’s a busy day on both sides of the border. Canada releases trade balance and Ivey PMI. In the U.S., employment data will be in focus, with the release of ADP nonfarm payrolls and unemployment claims. We’ll also get a look at ISM Non-Manufacturing PMI.

The Bank of Canada has been busy in 2018, raising interest rates three times. Just a few months ago, there was a strong likelihood that the BoC would end the year with a final rate hike, but economic conditions have changed dramatically and there are a number of factors in favor of the bank staying on the sidelines. The escalating trade war between the U.S. and China has hurt the Canadian export sector, and oil prices have fallen. Domestically, GDP declined 0.2% in September, the first drop since January. As well, the Federal Reserve has hinted that it will reduce the number of rate hikes in 2019, which has eased pressure on the BoC to raise rates.

It’s been a volatile week for the Canadian dollar, which has mirrored movement in the global stock markets. Equities started the week with gains, but this proved to be short-lived, as investor optimism following the Trump-Xi meeting quickly dissipated. At the start of the week, the Canadian dollar jumped after President Trump and Chinese President Xi reached an agreement, whereby the U.S. agreed to suspend further tariffs until March 1. However, investors have sobered since, wondering if the 90-day truce is simply a pause in the trade war between the world’s two largest economies. This has lowered risk appetite, and the Canadian dollar has now given up most of the Monday gains. The U.S. and China remain far apart on a number of issues, including repeated charges by the U.S. that China is engaged in theft of U.S. intellectual property. The markets have been very sensitive to the trade dispute, and the upcoming negotiations between the U.S. and China, with the likely ups-and-downs, promise to have a significant effect on market movement.

It’s looking Ugly, hopefully time for a pause [1]

Markets tumble after US sell-off [2]

Investors fret over inverse yield curves and global growth [3]

USD/CAD Fundamentals

Wednesday (December 5)

Thursday (December 6)

*All release times are DST

*Key events are in bold

USD/CAD for Wednesday, December 5, 2018

USD/CAD, December 5 at 8:30 EST

Open: 1.3265 High: 1.3296 Low: 1.3253 Close: 1.3277

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2970 1.3099 1.3198 1.3292 1.3383 1.3461

USD/CAD has edged higher in the Asian session and has been mostly flat in European trade

Further levels in both directions:

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 [7]

Market Analyst at OANDA [8]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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