USD/CAD – Canadian dollar steady, U.S. GDP misses mark

The Canadian dollar is up slightly on Thursday. Currently, the pair is trading at 1.3423, up 0.08%. On the release front, there are no Canadian events. In the U.S., Final GDP for the fourth quarter posted a 2.2% gain, shy of the estimate of 2.4%. Unemployment claims fell to 211 thousand, easily beating the estimate of 221 thousand. On Friday, Canada releases GDP, while the U.S. will publish consumer spending and inflation data.

Canadian bonds showed an inverted yield curve on Monday, after U.S. treasury bonds showed the same pattern on Friday. This has spooked investors, as the inverted yield curve is a sign of a recession. The Bank of Canada is already in a dovish stance and could follow the Fed and freeze rates for the rest of the year. If the economic slowdown continues, policymakers may have to consider a rate cut in order to stimulate the economy.

Global trade tensions have weighed on inflation levels in the developed economies, and the U.S. is no exception. However, with the Fed saying it will put a hold on rates until 2020, could that change? At the Fed policy meeting, policymakers lowered their inflation forecast for 2020, citing weakness in the Chinese and European economies. However, the chief economist of Credit Suisse, James Sweeney, has taken a different tack, saying that U.S. inflation could climb as high as 2.3% next year, in response to the lack of rate hikes. Sweeney said that although inflation remains below the Fed target of 2.0%, there are signs in the services sector of inflation picking up.

Muted response to news of trade talk progress

The Turkish delight that bites

USD/CAD Fundamentals

Thursday (March 28)

• 7:15 US FPMC Member Quarles Speaks
• 8:30 US Final GDP. Estimate 2.4%. Actual 2.2%
  
• 8:30 US Final GDP Price Index. Estimate 1.8%. Actual 1.7%
  
• 8:30 US Unemployment Claims. Estimate 222K
• 9:30 US FOMC Member Clarida Speaks
• 9:30 US FOMC Member Bowman Speaks
• 10:00 US Pending Home Sales. Estimate 0.1%
• 10:30 US Natural Gas Storage. Estimate -43B
• 17:20 FOMC Member Bullard Speaks

Friday (March 29)

• 8:30 Canadian GDP. Estimate 0.1%
• 8:30 Canadian RMPI. Estimate 1.2%
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Core Personal Spending. Estimate 0.3%
• 9:45 Chicago PMI. Estimate 61.1
• 10:00 UoM Revised Consumer Sentiment. Estimate 97.8

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, March 28, 2019

USD/CAD, March 28 at 10:00 EST

Open: 1.3412 High: 1.3440 Low: 1.3402 Close: 1.3423

USD/CAD Technical

USD/CAD ticked higher in the Asian session but then retracted. In European trade, the pair posted small gains.

• 1.3383 is providing support
• 1.3445 is the next resistance line
• Current range: 1.3383 to 1.3445

Further levels in both directions:

• Below: 1.3383, 1.3290, 1.3200 and 1.3125
• Above: 1.3445, 1.3552 and 1.3662

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