USD/CAD – Canadian dollar steady ahead of U.S retail sales

By Kenny Fisher, Currency Analyst at Market Pulse
OANDA MarketPulse

The Canadian dollar is showing little movement in the Thursday session. Currently, USD/CAD is trading at 1.2978, down 0.04% on the day. On the release front, Canada releases the New Housing Price Index, which is expected to rise to 0.2%. In the U.S, consumer spending is expected to improve in May, with Retail Sales expected to rise to 0.4% and Core Retail Sales predicted to rise to 0.5%. Unemployment Claims is expected to tick up to 223 thousand. On Friday, the US publishes manufacturing and consumer confidence reports.

The markets had priced in a rate hike from the Federal Reserve on Wednesday, and the Fed didn’t disappoint. The central bank raised interest rates by a quarter-point, to a range between 1.75 percent and 2.00 percent. Fed Chair Jerome Powell sounded hawkish in his press conference, saying that the economy was performing well and that “overall outlook for growth remains favorable”. This message echoed the rate statement, in which policymakers said that “economic activity has been rising at a solid rate”, pointing to stronger consumer spending and business investment. What was may have been the most notable development was that the Fed rate projections were revised upwards, predicting two additional rate hikes in 2018, for a total of four hikes. Until now, the Fed had projected three rate hikes this year. This represents a nod to the strength of the U.S economy and could boost the dollar against its rivals.

Trade negotiators on both sides of the border could use a tip or two from soccer officials, as the joint bid from the United States, Canada and Mexico won the right to host the 2026 World Cup on Wednesday. Such cooperation is only wishful thinking on the trade front, as the three countries remained deadlocked over the NAFTA agreement, notably over the U.S demand to increase the U.S content of cars produced in Canada or Mexico. A new headache for negotiators could be the Mexican national elections on August 1, with a leftist candidate, Andrés Manuel López Obrador, holding a comfortable lead at the polls. If Obrador wins the election, a new NAFTA deal could prove even more elusive, which could be bad news for the Canadian dollar.

USD/CAD Fundamentals

Thursday (June 14)

  • 8:30 Canadian NHPI. Estimate 0.2%
  • 8:30 US Core Retail Sales. Estimate 0.5%
  • 8:30 US Retail Sales. Estimate 0.4%
  • 8:30 US Unemployment Claims. Estimate 223K
  • 8:30 US Import Prices. Estimate 0.5%
  • 10:00 US Business Inventories. Estimate 0.3%
  • 10:30 US Natural Gas Storage. Estimate 87B

Friday (June 15)

  • 8:30 Canadian Foreign Securities Purchases. Estimate 54.9B
  • 8:30 Canadian Manufacturing Sales. Estimate 0.6%
  • 8:30 US Empire State Manufacturing Index. Estimate 19.1
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.5

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, June 14, 2018

USD/CAD, June 14 at 8:10 DST

Open: 1.2983 High: 1.2993 Low: 1.2949 Close: 1.2978

USD/CAD Technical

S3S2S1R1R2R3
1.27571.28501.29431.30151.31251.3224

USD/CAD was flat in the Asian session and has edged lower in European trade.

  • 1.2943 is weakened in support. It could be tested in the North American session
  • 1.3015 is the next resistance line
  • Current range: 1.2943 to 1.3015

Further levels in both directions:

  • Below: 1.2943, 1.2850 and 1.2757
  • Above: 1.3015, 1.3125, 1.3224 and 1.3315