The Canadian dollar is showing little movement in the Friday session, continuing the trend seen on Thursday. USD/CAD is trading slightly above the 1.29 line. On Thursday, Canadian GDP posted a small gain of 0.1%, matching the forecast. Canadian markets are closed for Canada Day, so there are no Canadian releases. In the US, today’s highlight is ISM Manufacturing PMI. The indicator is expected to remain unchanged at 51.3 points.

With the financial markets understandably focused on the stunning Brexit vote, the Federal Reserve and future monetary moves have shifted to the back-burner. That could change next week, as Fed Chair Janet Yellen will deliver a speech in Philadelphia. Will she provide any clues about a rate move? Yellen and her colleagues have sounded cautious about the US economy, and unless we see stronger employment and inflation numbers in the second half of 2016, the Fed may remain on the sidelines until 2017. Gone are the heady days of last December, when the Fed hiked rates and hinted that there was more to come in 2016, perhaps as many as four hikes. Bottom line? Traders shouldn’t count on an imminent rate hike to boost the US dollar; rather, the direction of the currency will largely be data-dependent – the Fed is unlikely to budge unless we see significantly improved employment and inflation numbers.

It’s been exactly a week since the historic referendum which saw the British electorate vote to exit the European Union after 40 years. Brexit The vote to leave the EU has caused deep instability in Europe and the UK and wiped out a staggering $3 trillion from global stock markets. As the dust has begun to settle, however, the financial markets have stabilized. The pound plunged as much as 11 percent in the aftermath of the vote but has stabilized in the past few days. Still, political leaders on both sides of the Channel will have to pick up the pieces and deal with the radical new landscape, which was unthinkable just a few months ago – that of a European Union without the UK. British politic have sought to calm the public and the markets, but the pound’s sharp drop on Thursday underscores that the situation is anything but normal. The country’s political picture is fluid, as the Conservatives are choosing a new leader, the Labor Party is in turmoil and elections may not be far away. On the financial front, the pound and the markets have taken a beating and London’s position as a world financial center has been shaken. The uncertainty is not going to disappear anytime soon, so traders can expect further volatility in the currency markets.

British Prime Minister Cameron was in the unenviable position of meeting with fuming European leaders at an EU Summit this week. Cameron asked for time to prepare Britain’s exit and wants to renew “productive” relations with Europe. However, the Europeans are in no mood for hugs and kisses on both cheeks, and the “divorce of the “century” between Britain and the EU could be rancorous and messy. German Chancellor Merkel said that the UK could not “cherry pick” and that a relationship with Europe entailed obligations and not just rights – in other words, the Europeans are rejecting “half membership”. As well, Europe wants Britain to exit as soon as possible, in order to minimize the uncertainty and instability caused by the Brexit vote. French President Hollande wasted no time going on the attack, saying that London should no longer remain a center for clearing euro trades. This market is worth trillions of euros in currency and derivative deals and such a move would be a severe blow to London’s financial sector. Already, the European Banking Authority has announced it is leaving London and moving to Paris or Frankfurt. In a strictly legal sense, Britain is still a member of the EU club, but politically, it is persona non grata (British EU Commissioner Jonathan Hill resigned shortly after the Brexit vote). The markets are allergic to uncertainty, so Britain’s unclear status within the EU will likely continue to weigh on the pound as well as risk currencies like the Canadian dollar.

USD/CAD Fundamentals

Thursday (June 30)

• 8:30 Canadian GDP. Estimate 0.1%. Actual 0.1%

Friday (July 1)

• 9:45 US Final Manufacturing PMI. Estimate 51.4
• 10:00 US ISM Manufacturing PMI. Estimate 51.3
• 10:00 US Construction Spending. Estimate 0.6%
• 10:00 US ISM Manufacturing Prices. Estimate 63.9
• All Day – US Total Vehicle Sales. Estimate 17.3M

* Key releases are in bold

*All release times are GMT

USD/CAD for Friday, July 1, 2016

USD/CAD July 1 at 9:00 GMT

Open: 1.2959 Low: 1.2925 High: 1.2975 Close: 1.2932

USD/CAD Technical

• USD/CAD was flat in the Asian session and has posted small losses in the European session
• 1.2830 is providing strong support
• 1.2952 was tested in support earlier and is a weak line

Further levels in both directions:

• Below: 1.2830, 1.2711 and 1.2562
• Above: 1.2952, 1.3048 and 1.3182
• Current range: 1.2952 to 1.3048

OANDA’s Open Positions Ratio

USD/CAD ratio is showing long positions with a majority (55%), indicative of trader bias towards USD/CAD breaking out and gaining ground.

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.

The Canadian dollar has ticked lower on Thursday, following sharp gains in the Wednesday session. Currently, USD/CAD is trading at 1.3080. In the US, today’s key release is Final GDP, with the estimate standing at 1.3%. We’ll also get a look at unemployment claims and pending home sales. There are no Canadian releases on the schedule. On Friday, Canada releases GDP, while the US will publish UoM Consumer Sentiment.

The Canadian dollar jumped on Wednesday, courtesy of a surprise announcement that OPEC members had reached a deal on cap production at a meeting in Algiers. Analysts had expected yet another inconclusive meeting, especially after Saudi Arabia and Iran had said that an agreement would not be reached before November. US crude surged 4.5% after the news and pushed the Canadian dollar higher by 1.0 percent.

US consumer confidence data continue to impress the markets with excellent readings. The CB Consumer Confidence jumped to 104.1 points in September, much higher than the forecast of 98.6 points. This excellent release improved upon a strong August report of 101.1 points. Stronger consumer confidence often translates into increased spending by consumers, which is vital for economic growth. If upcoming consumer spending numbers also move higher, the likelihood of a December hike will likely increase. Currently, the markets have priced in a quarter-point hike in December at 48 percent.

With the Federal Reserve staying on the sidelines in September and the November meeting just before the US election, the markets have circled December as the next date for a possible rate hike. Last week’s policy statement was generally upbeat and broadly hinted at a December rate hike. However, the markets can be forgiven for remaining somewhat skeptical, as the Fed has previously talked about a strong US economy and failed to follow up with a rate hike. Currently, a rate hike is priced in at 48 percent, but plenty can happen before the December policy meeting. The Fed has been sending out mixed messages about a rate hike, and this was underscored in the September decision, in which three FOMC members dissented and voted for an immediate hike. This lack of clarity has been disconcerting to the markets, which are always allergic to uncertainty. The markets haven’t forgotten that last December, the Fed projected a series of hikes in 2016, and has yet to deliver even one hike this year. As we approach December, the Fed will need to send out a more uniform message in order to restore its credibility with the markets.

USD/CAD Fundamentals

Thursday (September 29)

• 8:30 US Final GDP. Estimate 1.3%
• 8:30 US Unemployment Claims. Estimate 260K
• 8:30 US Final GDP Price Index. Estimate 2.3%
• 8:30 US Goods Trade Balance. Estimate -62.6B
• 10:00 US FOMC Member Jerome Powell Speaks
• 10:00 US Pending Home Sales. Estimate -0.1%
• 10:30 US Natural Gas Storage. Estimate 57B
• 16:00 US Federal Chair Janet Yellen Speaks

Friday (September 30)

• 8:30 Canadian GDP. Estimate 0.3%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 90.1

* Key releases are in bold

*All release times are EDT

USD/CAD for Thursday, September 29, 2016

USD/CAD September 29 at 7:50 GMT

Open: 1.3065 High: 1.3115 Low: 1.3045 Close: 1.3075

USD/CAD Technical

• USD/CAD showed little movement in the Asian session. In European trade, the pair has posted slight gains
• 1.3120 switched to resistance on Wednesday following sharp losses by USD/CAD
•  1.3028 is providing support

Further levels in both directions:

• Below: 1.3028, 1.2922 and 1.2815
• Above: 1.3120, 1.3253, 1.3371 and 1.3457
• Current range: 1.3028 to 1.3120

OANDA’s Open Positions Ratio

USD/CAD ratio is showing slight movement towards short positions. Currently, short positions have a strong majority (60%), indicative of trader bias towards USD/CAD reversing directions and moving downwards.

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.

The Canadian dollar depreciated on Thursday erasing the gains from a day earlier when the Organization of the Petroleum Exporting Countries (OPEC) announced an oil output cut surprising the market who was expecting a freeze. Doubts about the details of the agreement are keeping the price of oil from rising higher and have put pressure on the CAD that awaits Friday’s Canadian GDP figures for the month of July.

Comments all week from U.S. Federal Reserve members have made an interest rate hike this year very likely. Fed Presidents Loretta Mester and Dennis Lockhart both made comments supporting an interest rate, with Philadelphia President Patrick Harker focusing more on the impact of trade. Fed Chair Janet Yellen testimony in Washington continued to include no new information on the rate hike cycle, but understandably was concerned with regulation and oversight after the Wells Fargo scandal.

The Final U.S. GDP data for the second quarter delivered positive news for the USD with a higher than expected 1.4% percent growth beating the forecast of 1.3 percent based on the two previous estimates. Unemployment claims rose last week by 3,000 for a 254,000 claims but still under the anticipated 260,000. The job market has been the strongest pillar of the U.S. economic recovery, but as the market gets closer to full employment there are more questions about the quality and wages of the jobs that have replaced those lost after the 2008 crisis.

The USD/CAD lost 0.428 percent in the last 24 hours. The pair is trading at 1.3155 after the CAD rally ran out of steam at the 1.3050 level. Doubts on the OPEC strategy and its execution and vigilance of production quotas slowed down the appreciation of oil and reversed most of the gains for the Canadian currency versus the dollar.

The Bank of Canada (BoC) has stood on the sidelines for most of 2016 opting for the Federal government to try and do the heavy lifting to spark economic growth with fiscal stimulus. Announced in March and with an update expected in November the fiscal stimulus package has not been enough to spark growth and is now facing revenue challenges. The Finance department conducted a survey of economists that forecast a $50 billion drop in nominal output. A new round of stimulus is needed to help the Canadian economy overcome the drop of natural resource prices but it might prove to be a difficult political proposition. The BoC has said it is ready to act, but the runway is small on the interest rate front with 0.50 and with other options like negative rates and quantitative easing mentioned.

West Texas rose 1.654 percent in the last 24 hours. The price of crude is trading at $47.13 after the OPEC announced an oil production cut in their meeting in Algiers. There are question marks about the finer details of the agreement and they will be addressed in the official November meeting of the organization in Vienna.

Now although producers have agreed to agree, avoiding the fate of the Doha meeting it seems Saudi Arabia has had to compromise and is losing its unquestioned leadership of the group. Iraq apparently was not happy with the agreement and has become the number two crude producer as Iran was under sanctions for its nuclear program. Another factor limiting the impact of the announcement is that part of the strategy in achieving market share through record high levels production would keep shale producers out of the market, and if OPEC’s plan starts rising prices, it will also do it for competitors. Supply continues to be disconnected from the global demand for crude which has shown unusual patterns during the summer.

Market events to watch this week:

Friday September 30
4:30am GBP Current Account
8:30am CAD GDP m/m
9:00pm CNY Manufacturing PMI

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

The Canadian dollar has posted considerable gains in Friday’s North American session. Currently, USD/CAD is trading at 1.3020. The Canadian dollar responded positively as Canadian GDP in July gained 0.5%, better than the estimate of 0.3%. Canadian RMPI improved to -0.7%, beating the forecast of -1.0%. Later in the day, we’ll get a look at UoM Consumer Sentiment, with the markets predicting a strong reading of 90.1 points.

The Canadian dollar jumped on Wednesday, courtesy of a surprise announcement that OPEC members had reached a deal on cap production at a meeting in Algiers. Analysts had expected yet another inconclusive meeting, especially after Saudi Arabia and Iran had said that an agreement would not be reached before November. US crude surged 4.5% after the news and pushed the Canadian dollar higher by 1.0 percent. However, the loonie surrendered much of these gains on Thursday, as the US posted better-than-expected GDP and jobless claims.

The US economy expanded 1.4% in the second quarter, revised from the preliminary estimate of 1.1%. Consumer spending has been strong, making up for sluggish business investment and weaker demand for US exports. The US consumer is optimistic about the economy, as underscored by recent CB consumer confidence surveys, which have been above the 100-level for two months running. On the labor front, unemployment claims came in at 254 thousand, marking the eighth straight week that jobless claims have come in below the forecast.

US consumer confidence numbers continue to impress the markets. The CB Consumer Confidence jumped to 104.1 points in September, much higher than the forecast of 98.6 points. This excellent release improved upon a strong August report of 101.1 points. Stronger consumer confidence often translates into increased spending by consumers, which is vital for economic growth. If upcoming consumer spending numbers also move higher, the likelihood of a December hike will likely increase. Currently, the markets have priced in a quarter-point hike in December at 48 percent.

USD/CAD Fundamentals

Friday (September 30)

• 8:30 Canadian GDP. Estimate 0.3%. Actual 0.5%
• 8:30 Canadian RMPI. Estimate -1.0%. Actual -0.7% 
• 8:30 Canadian IPPI. Estimate -0.1%. Actual -0.5%
• 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
• 8:30 US Personal Spending. Estimate 0.2%. Actual 0.0%
• 8:30 US Personal Income. Estimate 0.2%. Actual 0.2%
• 9:45 US Chicago PMI. Estimate 52.1. 
• 10:00 US Revised UoM Consumer Sentiment. Estimate 90.1
• 10:00 US Revised UoM Inflation Expectations

* Key releases are in bold

*All release times are EDT

USD/CAD for Friday, September 30, 2016

USD/CAD September 30 at 8:45 GMT

Open: 1.3153 High: 1.3195 Low: 1.3085 Close: 1.3120

USD/CAD Technical

• USD/CAD showed little movement in the Asian and European sessions. The pair has posted sharp gains in the North American session
• 1.3120 is a weak resistance line
•  1.3028 is providing support

Further levels in both directions:

• Below: 1.3028, 1.2922 and 1.2815
• Above: 1.3120, 1.3253, 1.3371 and 1.3457
• Current range: 1.3028 to 1.3120

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little change in the Friday session. Currently, short positions have a strong majority (62%), indicative of trader bias towards USD/CAD reversing directions and moving downwards.

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.

USD/CAD is unchanged on Monday. In the North American session, the pair is trading at the 1.34 line. Taking a look at today’s releases, US Personal Spending climbed 0.5%, matching the forecast. Chicago PMI dropped to 50.6 points, well off the estimate of 54.1 points. On Tuesday, Canada releases GDP, with the markets expecting a weak gain of 0.2%. The US will publish ISM Manufacturing PMI, with an estimate of 51.8 points.

The wobbly Canadian dollar continues to trade above the 1.34 line, close to 7-month lows against the strong greenback. The Canadian economy has not been performing well and the Bank of Canada recently downgraded its forecasts for economic growth, projecting GDP to grow 1.1 percent in 2016, down from its forecast of 1.3 percent in July. For 2017, growth is expected at 2.0 percent, down from 2.2 percent in July. Canadian inflation levels remain weak and this was underscored by a poor showing from the Raw Materials Price Index, which posted a third straight decline in September, coming in at -0.1%. The markets had forecast a solid gain of 0.5%. The GDP release for August will be published on Tuesday, with the markets braced for a weak gain of 0.2%, after a respectable gain of 0.5% in July. If GDP is weaker than expected, the Canadian dollar could rack up further losses.

US Advance GDP jumped 2.9 percent in the third quarter, and the rosy number will be great news for Fed policymakers who want to raise rates in December. Currently, a hike is priced in at impressive 72 percent. The prospect of a US rate hike for the first time in a year has helped the US dollar gain ground at the expense of the Canadian currency. The US economy remains strong, buoyed by a labor market that is close to capacity, with unemployment at a healthy 5.0%. Inflation levels, however, remain low and are unlikely to show much improvement in the next few months. Although the Fed would prefer stronger inflation, other economic indicators remain strong enough such that the lack of inflation is unlikely to be the critical factor in the Fed rate decision. The Fed will also hold a policy meeting in early November, but is unlikely to make any rate moves just before the US presidential election.

USD/CAD Fundamentals

Monday (October 31)

• 8:30 Canadian RMPI. Estimate +0.5%. Actual -0.1%
• 8:30 Canadian IPPI. Estimate 0.4%. Actual 0.4%
• 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
• 8:30 US Personal Spending. Estimate 0.5%. Actual 0.5%
• 8:30 US Personal Income. Estimate 0.3%. Actual 0.3%
• 9:45 US Chicago PMI. Estimate 54.1. Actual 50.6
• Tentative – US Loan Officer Survey

Tuesday (November 1)

• 8:30 Canadian GDP. Estimate 0.2%
• 10:00 US ISM Manufacturing PMI. Estimate 51.8

*All release times are EDT

*Key events are in bold

USD/CAD for Monday, October 31, 2016

USD/CAD October 31 at 11:10 GMT

Open: 1.3405 High: 1.3424 Low: 1.3371 Close: 1.3403

USD/CAD Technical

• USD/CAD has shown limited movement in the Asian and the European sessions. The pair has posted slight gains early in the North American session
• 1.3371 was tested in support earlier and remains under pressure
• There is resistance at 1.3457

Further levels in both directions:

• Below: 1.3371, 1.3253, 1.3120 and 1.3028
• Above: 1.3457, 1.3551 and 1.3648
• Current range: 1.3371 to 1.3457

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Monday session, consistent with the lack of movement from USD/CAD. Currently, short positions command a strong majority (67%), indicative of trader bias towards USD/CAD breaking out and moving to lower ground.

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.

USD putting pressure on oil and metals as OPEC debates agreement

Commodity currencies have depreciated as global prices of oil and gold have dropped against a recovering U.S. dollar following the U.S. elections. The Canadian dollar is heavily correlated to the price of crude as the economy is dependent on natural resources. The loonie stopped its rapid fall against the USD at the same time the Organization of the Petroleum Exporting Countries (OPEC) announced their plans to freeze oil production with an open invitation to other major producers. Even though the Doha meeting did not yield an agreement it showed a willingness to tackle falling prices as a collective.

Wednesday, November 30 will be full of indicators for CAD traders. The OPEC meeting will start at 5:00 am EST in Vienna. Iran and Iraq are still arguing they should be excluded from the production cut which could once again end in failure. U.S. jobs data releases begin this week with the ADP private payrolls at 8:15 am EST. Canadian monthly gross domestic product (GDP) figures will be available at 8:30 am EST forecasted to show a 0.1 percent increase. U.S. crude oil inventories will be released at 10:30 am EST.

Oil demand has not risen as fast as production which is why an agreement to curb growing supply is need to boost prices. The market share strategy launched by OPEC has not yielded the intended results but has in fact increased the rift between some members. Oil prices will dictate CAD intraday moves, first with the end of the meeting in Vienna and then with the weekly inventories in the United States.

USD/CAD has appreciated 0.181 percent in the last 24 hours. The CAD has been caught between commodity prices that were diverging earlier in the day, but are now tumbling down against the USD. The stronger dollar continues to put pressure on metal prices as the December Fed meeting approaches. Oil prices have had not help from OPEC members who are still bickering ahead of their year-end meeting in Vienna.

The Canadian economy is heavily dependent on commodity prices that with the drop in crude prices due to oversupply made the situation for the Canadian economy worse until the OPEC was able to slow-down if not stop the bleeding. The Bank of Canada (BoC) Governor made two pro-active cuts to the benchmark interest rate in 2015 based on the forecast that energy prices will tumble lower, and they did. In 2016 the BoC has remained in the sidelines, then again so has the U.S. Federal Reserve. The Canadian central bank is running out of options as the rate stands at 0.50 percent but it has not discounted negative rates and other unconventional monetary policy tools to boost the economy.

Governor Poloz has stressed that in the current economic climate just having a weak currency is not enough to boost exports. The interconnected economy demands a better competitive advantage that just low prices and Canada is struggling to discover just what that advantage is, as natural resource prices remain soft. The government has stepped in with a fiscal stimulus package in March, but positive results are few and far between as the global economy continues to stagnate.

The Organization for Economic Co-operation and Development (OECD) has predicted Canada will grow by 1.2 percent in 2016 and rise to 2.1 percent next year. The rise next year is heavily dependant on the growth in the U.S. as more than 75 percent of Canadian exports end up to the neighbour to the south.

West Texas oil has dropped 4.21 percent in the last 24 hours. The price of WTI is trading at $44.76 after conflicting comments from OPEC members have put downward pressure on crude as the future of the production cut agreement is looking uncertain. Iran was under western sanctions related to its nuclear program and is demanding other members who boosted production bear the brunt of the cut. Iraq is also seeking an exception to the cut reasoning they need the extra funds to offset the costs of fighting ISIS. Saudi Arabia has softened its stance against Iran but has only managed lukewarm support from non-OPEC members. A global agreement is needed if a strengthening of crude prices is the overarching goal. Although Russia was one of the first to respond to the Saudi Arabia freeze invitation, they have not done so for a production cut agreement which would limit the impact on global crude prices even as the battle within the OPEC ends with an agreement to reduce supply for next year.

Market events to watch this week:

Wednesday, November 30
All Day OPEC Meetings
8:15am USD ADP Non-Farm Employment Change
8:30am CAD GDP m/m
10:30am USD Crude Oil Inventories
7:30pm AUD Private Capital Expenditure q/q
8:00pm CNY Manufacturing PMI
8:45pm CNY Caixin Manufacturing PMI
Thursday, December 1
Tentative GBP Bank Stress Test Results
4:30am GBP Manufacturing PMI
8:30am USD Unemployment Claims
10:00am USD ISM Manufacturing PMI
7:30pm AUD Retail Sales m/m
Friday, December 2
4:30am GBP Construction PMI
8:30am CAD Employment Change
8:30am CAD Unemployment Rate
8:30am USD Average Hourly Earnings m/m
8:30am USD Non-Farm Employment Change
8:30am USD Unemployment Rate

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

The Canadian dollar has posted gains on Wednesday, erasing the losses which marked the Tuesday session. Currently, the pair is trading at 1.3360. In economic news, OPEC members are meeting in Vienna, and there is renewed optimism that an agreement will be reached to cut production levels. Canada will release GDP, with the estimate standing at a weak 0.1%. The US will publish ADP Nonfarm Employment Change, with the indicator expected to improve to 161 thousand. On Thursday, the US releases unemployment claims and the ISM Manufacturing PMI.

OPEC members are meeting today in Vienna, hoping to reach an agreement to cap production in order to boost oil prices. OPEC wants to include non-OPEC countries as well, and Russia has come out in favor of a freeze. One of the major sticking points has been Iran’s insistence to maintain output at pre-sanction levels. Word is out that Saudi Arabia has swallowed hard and accepted Iran’s demand, so the markets are optimistic that a deal will be reached later in the day. The Canadian dollar has responded with gains and is currently trading at 3-week highs. US crude has surged 6.6 percent in the Wednesday session and is trading above the $48 level.

US indicators impressed on Tuesday. Preliminary GDP sparkled in the third quarter, as the economy expanded 3.2%, above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. Solid consumer confidence numbers have been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.

US Q3 GDP Revised Upward on Consumer Spending

OPEC to Save Face with a Disappointing Deal

USD/CAD Fundamentals

Wednesday (November 30)

• All Day – OPEC Meetings
• 8:15 US ADP Nonfarm Employment Change. Estimate 161K
• 8:30 Canadian GDP. Estimate 0.1%
• 8:30 Canadian RMPI. Estimate 3.2%
• 8:30 Canadian IPPI. Estimate 0.7%
• 8:30 US Core PCE Price Index. Estimate 0.1%
• 8:30 US Personal Spending. Estimate 0.5%
• 8:30 US Personal Income. Estimate 0.4%
• 9:45 US Chicago PMI. Estimate 52.1
• 10:00 US Pending Home Sales. Estimate 0.3%
• 10:30 US Crude Oil Inventories. Estimate 0.7M
• 11:45 US FOMC Member Jerome Powell Speech
• 14:00 US Beige Book

Upcoming Key Events

Thursday (December 1)

• 8:30 US Unemployment Claims. Estimate 252K
• 10:00 US ISM Manufacturing PMI. Estimate 52.1

*All release times are EST

*Key events are in bold

USD/CAD for Wednesday, November 30, 2016

USD/CAD November 30 at 8:00 EST

Open: 1.3431 High: 1.3451 Low: 1.3354 Close: 1.3373

USD/CAD Technical

• USD/CAD was flat in the Asian session and has posted losses in European trade
• 1.3371 is under pressure in support
• There is resistance at 1.3457

Further levels in both directions:

• Below: 1.3371, 1.3253 and 1.3120
• Above: 1.3457, 1.3551, 1.3648 and 1.3782
• Current range: 1.3371 to 1.3457

OANDA’s Open Positions Ratio

USD/CAD ratio remains unchanged this week. Currently, short positions command a strong majority (57%), indicative of trader bias towards USD/CAD continuing to move to lower ground.

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.

The Canadian dollar continues to drop against its US counterpart. On Thursday, USD/CAD has edged higher as it trades at 1.3450. On the release front, there are a host of key indicators out of the US and Canada. In the US, the highlight of the day is Final GDP. We’ll also get a look at Core Durable Goods Orders and unemployment claims. Canada will release CPI and retail sales reports. The action continues on Friday, as Canada releases GDP while the US publishes New Home Sales and UoM Consumer Sentiment.

The US economy continues to expand in impressive fashion, as underscored by strong GDP forecasts for the third quarter. Preliminary GDP came in at 3.2%, beating the forecast of 3.0%. Final GDP is expected to be even stronger, with an estimate of 3.3%. If the indicator matches or beats this rosy prediction, the US dollar could respond with gains. As for the Canadian dollar, it posted strong gains in early December, piggybacking on surging oil prices. However, the currency reversed directions after the Federal Reserve raised rate last week, wiping out those recent gains. USD/CAD is currently at 4-week highs, and the rally could continue if this week’s key Canadian indicators fail to meet expectations.

When the Federal Reserve raised interest rates in December 2015, the Fed confidently predicted a series of rate hikes in 2016 in order to keep a hot US economy in check. However, the Fed remained on the sidelines throughout 2016 and refrained from any rate hikes until last week. There were several false starts along the way, as expectations that the Fed would raise rates earlier in 2016 failed to materialize. This led to sharp criticism of Janet Yellen for failing to provide a clear monetary policy. Yellen seems to have been keenly aware of this, as the Fed did everything short of buying advertisements in daily newspapers to get out the message that it planned to raise rates in December. Indeed, a rate hike was priced in as high as 100% by some analysts. Yellen should certainly be commended for a clear message to the markets.

Now that the Fed has finally pressed the rate trigger, what’s next for Janet Yellen & Co.? In September, Fed officials said they expected two rate hikes in 2017, but the Fed is now projecting three or even four hikes next year. However, projections need to be adjusted to economic conditions, and the markets will understandably be somewhat skeptical about Fed rate forecasts. As well, the wild card of Donald Trump could also play a critical role in monetary policy. Trump’s economic platform remains sketchy, apart from declarations that he will increase government spending and cut taxes. Still, there is growing talk about ‘Trumpflation’, with the markets predicting that Trump’s policies will increase inflation levels, which have been persistently weak. If inflation levels do heat up, there will be pressure on the Fed to step in and raise interest rates.

USD/CAD Fundamentals

Thursday (December 22)

• 8:30 Canadian CPI. Estimate -0.1%
• 8:30 Canadian Core Retail Sales. Estimate 0.7%
• 8:30 Canadian Retail Sales. Estimate 0.2%
• 8:30 US Core Durable Goods Orders. Estimate 0.2%
• 8:30 US Final GDP. Estimate 3.3%
• 8:30 US Unemployment Claims. Estimate 255K
• 8:30 US Durable Goods Orders. Estimate -4.9%
• 8:30 US Final GDP Price Index. Estimate 1.4%
• Tentative – Canadian Core CPI. Estimate -0.1%
• 10:00 US HPI. Estimate 0.4%
• 9:00 US Core PCE Price Index. Estimate 0.1%
• 10:00 US Personal Spending. Estimate 0.4%
• 10:00 US CB Leading Index. Estimate 0.2%
• 10:00 US Personal Income. Estimate 0.3%
• 10:30 US Natural Gas Storage. Estimate -201B

Friday (December 23)

• 8:30 Canadian GDP. Estimate 0.1%
• 10:00 US New Home Sales. Estimate 575K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.2

*All release times are EST

*Key events are in bold

USD/CAD for Thursday, December 22, 2016

USD/CAD December 22 at 6:50 EST

Open: 1.3432 High: 1.3464 Low: 1.3416 Close: 1.3462

USD/CAD Technical

• USD/CAD was flat in the Asian session and has posted slight gains in European trade
• 1.3457 has switched to a support role and remains fluid.
• 1.3589 is the next resistance line

Further levels in both directions:

• Below: 1.3457, 1.3371, 1.3253 and 1.3120
• Above: 1.3589, 1.3759 and 1.3889
• Current range: 1.3457 to 1.3589

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little movement in the Thursday session. Currently, short positions have a slim majority (52%), indicative of a very slight trader bias towards USD/CAD continuing to move upwards.

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.

The Canadian dollar is unchanged on Friday, the final session before the week of Christmas. Currently, USD/CAD is trading at the 1.35 line. On the release front, the markets are keeping a close eye on today’s key indicators out of Canada and the US. Canadian markets will be closed on Monday and Tuesday.

After an uneventful week, there was plenty of data for the markets to digest on Thursday. US Final GDP for the third quarter posted an excellent gain of 3.5%, above the forecast of 3.3%. Durable goods reports were a mixed bag. Core Durable Goods Orders gained 0.5%, above the forecast of 0.2%. Durable Goods Orders posted a sharp decline of 4.6%, but this was better than the forecast of -4.9%. On the employment front, unemployment claims jumped to 275 thousand, much weaker than the forecast of 255 thousand. Still, the for-week average of jobless claims remains at very low levels.

In Canada, key numbers were a mixed bag on Thursday. Inflation indicators disappointed and headed downwards, as CPI came in at -0.4%, while Core CPI posted a reading of -0.5%. Both indicators missed their estimates of -0.1%. There was much better news on the consumer spending front, as Core Retail Sales surged 1.4% (estimate 0.7%) and Retail Sales gained 1.1% (estimate 0.2%).

The US economy continues to grow at a brisk clip. Final GDP, the last of three GDP reports, was revised upwards to 3.5%, beating the estimate of 3.3%. The previous GDP forecast was 3.2%. The stellar reading can be attributed to stronger consumer spending and an increase in business investment, and marked the strongest growth rate since the third quarter of 2015.

Now that the Federal Reserve has taken the leap and raised rates by a quarter point, what can we expect from the Fed in the coming months? In September, when speculation of a rate hike began to heat up, Fed officials said they expected two rate hikes in 2017. However, with the US economy showing solid growth and the labor market close to capacity, the Fed is now projecting three or even four hikes next year. However, projections can change based on conditions, and the markets will understandably be somewhat skeptical about Fed rate forecasts. As well, the incoming Trump administration could play a critical role in the Fed’s monetary stance. Trump’s economic platform remains sketchy, but there is growing talk about ‘Trumpflation’, with the markets predicting that Trump’s plans to cut taxes and increase fiscal spending will lead to higher inflation. If inflation levels do heat up in early 2017, there will be pressure on the Fed to step in and raise interest rates.

USD/CAD Fundamentals

Friday (December 23)

• 8:30 Canadian GDP. Estimate 0.1%
• 10:00 US New Home Sales. Estimate 575K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.2

*All release times are EST

*Key events are in bold

USD/CAD for Friday, December 23, 2016

USD/CAD December 23 at 6:45 EST

Open: 1.3481 High: 1.3501 Low: 1.3477 Close: 1.3498

USD/CAD Technical

• USD/CAD was flat in the Asian session and has posted slight gains in European trade
• 1.3457 is providing support
• 1.3589 is the next resistance line

Further levels in both directions:

• Below: 1.3457, 1.3371, 1.3253 and 1.3120
• Above: 1.3589, 1.3759 and 1.3889
• Current range: 1.3457 to 1.3589

OANDA’s Open Positions Ratio

USD/CAD ratio is showing slight gains in short positions. Currently, short positions have a majority (55%), indicative of trader bias towards USD/CAD continuing to move upwards.

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.

Central banks to remain on hold with politics at the forefront

The dollar is weaker after the Trump administration remained more focused on anti-trade policies than the fiscal stimulus and infrastructure spending that lifted inflation expectations in the U.S. The first 100 days of Trump’ administration will be crucial. While he seemed bulletproof during the campaign his administration has stumbled over itself on an overall strong start, but lacking some strategy or political savvy. He has yet to bring markets onside with any tangible policy on fiscal stimulus or infrastructure spending. There is an expectation of higher inflation, which in turn has made the Fed up their rate hike forecasts to 3/4 this year. The Fed had the luxury of patience on monetary policy tightening in the past due to the stagnant inflation, but a government willing to spend to boost growth could force a faster pace of interest rate rises.

The economic calendar for January 30 to February 2 is packed to the brim with important releases. Four central bank rate decisions: Bank of Japan (BOJ), U.S. Federal Reserve, Bank of England (BoE) and Reserve Bank of Australia (RBA). Manufacturing data from the United Kingdom, United States and China. Employment data out of the U.S. with the publication of the ADP private payrolls and the biggest indicator in the currency markets the U.S. non farm payrolls (NFP) to finish the week. Traders will have to keep a close eye on their calendars this week as a deluge of data will be hitting the wires.

The EUR/USD gained 0.012 percent in the last five days. The single currency is trading at 1.0694 in a week full of volatility but that ultimately ended flat for the most traded pair. The release of the disappointing first estimate of the U.S. gross domestic figures (GDP) at 1.9 percent growth in the fourth quarter of 2016. Last week President Trump pledged to hit 4 percent figures through fiscal stimulus and infrastructure spending. The softer economic indicators and Trump’ lack of details on the two factors that sparked the rally in global markets put downward pressure on the dollar.

The Fed has received the backing of U.S. Treasury Secretary nominee Steven Mnuchin regarding the independence of the central bank. The Federal Open Market Committee (FOMC) on Wednesday is not anticipated to bring any surprises after the December rate hike the central bank is expected to wait-and-see to gauge the impact of the first 100 days of the Trump administration and adjust the interest rate if needed. A rate hike is not forecasted in the first quarter of the year and the Fed is willing to let the economy run a little hot before stepping in. The lack of details from Trump policies on policies who could bump inflation higher have kept the probabilities of no changes in the interest rate at 96 percent in February according to the CME’ FedWatch tool that tracks Fed Fund futures prices.

US Growth was slowed down by imports, which brings trade to the forefront, but the rise in imports was fuelled by a strong dollar not a lack of tariffs. Currencies that have depreciated against the dollar enjoy a competitive advantage. Trump administration is creating a paradox by focusing on growth which will boost the USD versus wanting more exports that are hurt with a strong USD. There are few good outcomes of the trade spat with Mexico with the focus on the proposed wall between the two nations and who will pay for it. A questionable matter of national security has hijacked the conversation away from the promised policies on growth initiatives.

American jobs are forecasted to have another 150,000 plus reading on Friday, February 3 with the release of the U.S. non farm payrolls (NFP) by the Bureau of Labor Statistics. The emphasis on market watchers will be on wages more than the headline jobs number. The positive wage growth in the December data was the highlight even if the headline number missed expectations. Worker’ take home pay is expected to grow 0.3 percent in the last month.

The GBP/USD rose 1.828 percent in the last week. The pair is trading at 1.2548 after the U.K. supreme ruled against the government and forced it to go through parliament regarding the exit of the United Kingdom in the European Union. The idea of a softer Brexit boosted the pound as markets had punished the currency as PM Theresa May kept pushing for a clean break with no back up deal in place. The ruling will push back May’ timeline for a Brexit and could indeed soften the end result. The British PM visit to Washington to meet President Trump will be a first approach with the goal of reaching a fast trade deal with the U.S. but in the current anti-trade climate in America that is easier said than done.

The Bank of England (BoE) is expected to hold rates unchanged on the first Super Thursday of the year. Super because of the release of the inflation report, interest rate decision, minutes from the monetary policy committee and a speech by BoE governor Mark Carney. The threat of Brexit has loomed over the central bank, but with an unclear timeline all that is left for policymakers is to wait.

Market events to watch this week:

Monday, January 30
Midnight JPY Monetary Policy Statement
Midnight JPY BOJ Outlook Report
Midnight JPY BOJ Policy Rate
Tuesday, January 31
1:30am JPY BOJ Press Conference
8:30am CAD GDP m/m
10:00am USD CB Consumer Confidence
4:45pm NZD Employment Change q/q
4:45pm NZD Unemployment Rate
5:35pm CAD BOC Gov Poloz Speaks
8:00pm CNY Manufacturing PMI
Wednesday, February 1
4:30am GBP Manufacturing PMI
8:15am USD ADP Non-Farm Employment Change
10:00am USD ISM Manufacturing PMI
10:30am USD Crude Oil Inventories
2:00pm USD FOMC Statement
2:00pm USD Federal Funds Rate
Thursday, February 2
4:30am GBP Construction PMI
7:00am GBP BOE Inflation Report
7:00am GBP MPC Official Bank Rate Votes
7:00am GBP Monetary Policy Summary
7:00am GBP Official Bank Rate
7:30am GBP BOE Gov Carney Speaks
8:30am USD Unemployment Claims
7:30pm AUD RBA Monetary Policy Statement
8:45pm CNY Caixin Manufacturing PMI
Friday, February 3
4:30am GBP Services PMI
8:30am USD Average Hourly Earnings m/m
8:30am USD Non-Farm Employment Change
8:30am USD Unemployment Rate
10:00am USD ISM Non-Manufacturing PMI

*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

USD/CAD has edged higher at the start of the trading week. In the Monday session, the pair is trading at 1.3150. On the release front, there are no Canadian events on the schedule. In the US, the key event of the day is Pending Home Sales, which is expected to rebound with a gain of 1.6%. On Tuesday, Canada will release GDP, with an estimate of 0.3%. The US will publish CB Consumer Confidence, with the markets expecting a strong reading of 112.6 points.

Canada will release the November GDP report on Tuesday. In October, GDP was unexpectedly low, missing the estimate of a 0.1% gain. This marked the first decline since May and has raised concerns that economic growth in the fourth quarter will be weak. If GDP again misses expectations, we could see the Canadian dollar lose ground, and the BoC will be under increased pressure to lower interest rates. Last week, Earlier in January, the bank held rates at 0.50% but expressed concerns of economic turbulence due to Donald Trump’s protectionist stance, which could have significant repercussions for the Canadian economy.

The markets had predicted that US economic growth would soften in the fourth quarter, and Advance GDP fell short of the estimate. The economy expanded 1.9%, shy of the estimate of 2.1%. Business investment and consumer spending remains solid and should continue into 2017. However, Trump’s protectionist rhetoric and action, which saw tensions escalate with Mexico last week, could cloud the bright picture for the US economy.

Donald Trump has barely warmed the president’s chair in the Oval House, but has already signed a host of controversial executive orders which have been condemned both domestically and abroad. Trump has withdrawn from the Trans-Pacific Partnership and declared he will reopen the NAFTA trade agreement with Canada and Mexico. He has also ordered work to begin on a wall with Mexico and banned immigrants from seven Moslem countries. Trump’s unconventional and disjointed approach to international politics and trade could have major ramifications on global trade and could lead to financial instability in global markets, triggering volatility in the currency markets. Just a few days before being sworn in as president, Trump stated that the US dollar was “too strong”, blaming a weak Chinese currency. Predictably, the greenback lost ground after Trump’s remarks. It’s a safe bet that Trump’s offhand tweets and comments will continue to fuel market movement.

Geopolitical and Trade Risks Dominate Market Moves

USD/CAD Fundamentals

Monday (January 30)

• 8:30 US Core PCE Price Index. Estimate 0.1%
• 8:30 US Personal Spending. Estimate 0.4%
• 8:30 US Personal Income. Estimate 0.4%
• 10:00 US Pending Home Sales. Estimate 1.6%
• Tentative – US Loan Officer Survey

Upcoming Key Events

Tuesday (January 31)

• 8:30 Canadian GDP. Estimate 0.3%
• 10:00 US CB Consumer Confidence. Estimate 112.6

*All release times are GMT

*Key events are in bold

USD/CAD for Monday, January 30, 2017

USD/CAD January 30 at 8:20 EST

Open: 1.3129 High: 1.3169 Low: 1.3121 Close: 1.3155

USD/CAD Technical

• USD/CAD was flat in the Asian session posted slight gains in European trade
• 1.3120 is providing weak support
• 1.3253 is the next resistance line

Further levels in both directions:

• Below: 1.3120, 1.3003, 1.2922 and 1.2815
• Above: 1.3253, 1.3371 and 1.3457
• Current range: 1.3120 to 1.3253

OANDA’s Open Positions Ratio

In the Monday session, USD/CAD ratio long positions command a strong majority (61%), indicative of trader bias towards USD/CAD continuing to move upwards.

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.

USD/CAD is slightly lower on Tuesday, continuing the downward trend which marked the Monday session. Currently, the pair is trading at 1.3070. On the release front, Canada releases GDP, with the estimate standing at 0.3%. In the US, today’s key event is CB Consumer Confidence, with the markets expecting a strong reading of 112.6 points.

All eyes are on Canadian GDP, which will be released later on Tuesday. In October, GDP declined 0.3%, missing the estimate of a 0.1% gain. This marked the first decline since May and has raised concerns that economic growth in the fourth quarter will be weak. If GDP again misses expectations, we could see the Canadian dollar lose ground, and the BoC will be under increased pressure to lower interest rates. Earlier in January, the bank held rates at 0.50% but expressed concerns of economic turbulence due to Donald Trump’s protectionist stance, which could have significant repercussions for the Canadian economy.

The markets had predicted that US economic growth would soften in the fourth quarter, and Advance GDP fell short of the estimate. The economy expanded 1.9%, shy of the estimate of 2.1%. Business investment and consumer spending remains solid and should continue into 2017. However, Trump’s protectionist rhetoric and action, which saw tensions escalate with Mexico last week, could cloud the bright picture for the US economy.

Donald Trump has barely warmed the president’s chair in the Oval House, but has already signed a host of controversial executive orders which have been condemned both domestically and abroad. Trump has withdrawn from the Trans-Pacific Partnership and declared he will reopen the NAFTA trade agreement with Canada and Mexico. He has also ordered work to begin on a wall with Mexico and banned immigrants from seven Moslem countries. Trump’s unconventional and disjointed approach to international politics and trade could have major ramifications on global trade and could lead to financial instability in global markets, triggering volatility in the currency markets. Just a few days before being sworn in as president, Trump stated that the US dollar was “too strong”, blaming a weak Chinese currency. Predictably, the greenback lost ground after Trump’s remarks. It’s a safe bet that Trump’s offhand tweets and comments will continue to fuel market movement.

Canadian GDP Rises 0.4% in November

Geopolitical and Trade Risks Dominate Market Moves

Fed Expected to Keep Rates on Hold Awaiting Trump Plan

USD/CAD Fundamentals

Tuesday (January 31)

• 8:30 Canadian GDP. Estimate 0.3%
• 8:30 Canadian RMPI. Estimate 2.9%
• 8:30 Canadian IPPI. Estimate IPPI. Estimate 0.5%.
• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.0%
• 9:45 US Chicago PMI. Estimate 55.1
• 10:00 US CB Consumer Confidence. Estimate 112.6

Upcoming Key Releases

Wednesday (February 1)

• 8:15 US ADP Nonfarm Employment Change. Estimate 165K
• 10:00 US ISM Manufacturing PMI. Estimate 55.0
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rates. Estimate

*All release times are GMT

*Key events are in bold

USD/CAD for Tuesday, January 31, 2017

USD/CAD January 31 at 8:00 EST

Open: 1.3102 High: 1.3123 Low: 1.3057 Close: 1.3067

USD/CAD Technical

• USD/CAD was flat in the Asian session posted slight losses in European trade
• 1.3003 is providing support
• 1.3120 is the next resistance line

Further levels in both directions:

• Below: 1.3003, 1.2922 and 1.2815
• Above: 1.3120, 1.3253, 1.3371 and 1.3457
• Current range: 1.3003 to 1.3120

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Tuesday session. Currently, long positions command a strong majority (61%), indicative of trader bias towards USD/CAD reversing directions and moving upwards.

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.

USD/CAD has moved higher throughout the week and this trend continues in the Thursday session. Early in the North American session, the pair is trading at 1.3350. On the release front, Canadian GDP edged lower to 0.3%, matching the estimate. US unemployment claims sparkled, falling to 223 thousand, the fewest since March 1973. On Friday, the US releases ISM Non-Manufacturing PMI, and the markets will be listening closely as Janet Yellen and three other FOMC members deliver speeches.

There were no surprises from the Bank of Canada, which held rates at 0.50%, where they have been pegged since July 2015. However, the rate statement expressed concern, stating that the economy faces “significant uncertainties”, including a lack of clarity over Donald Trump’s economic agenda. Trump has called for the NAFTA trade agreement to be scrapped, although he has since backtracked and said that he only wanted to “tweak” the provisions that affect Canada-US trade. Still, Trump’s protectionist leanings could hurt the Canadian economy, which sends 80% of its exports to its southern border. Even if NAFTA is left alone, the US could slap import duties on Canadian products, which would have negative ramifications for the Canadian economy. Meanwhile, the Canadian dollar is struggling, dropping 1.9% this week. The currency is close to an 8-week low, and USD/CAD could push past the 1.34 level this week.

There was plenty of anticipation in the air ahead of President Trump’s speech to Congress. In the end, however, the speech was short on specifics and the markets didn’t show much reaction. Trump promised “massive” tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, “financed through both public and private capital”. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we’ve seen in the past.

When will the Fed press the rate trigger? That should occur in the first half of the year, but the key question is whether the Fed makes a move at the next policy meeting on March 15. On Tuesday, FOMC members William Dudley and John Williams both hinted at an imminent hike by the Fed, which has raised the odds of a March hike at 66%, according to Reuters. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for “serious consideration” at the March policy meeting. The markets will be listening closely to speeches from other FOMC members this week, culminating in speeches from Janet Yellen and Fed Governor Stanley Fischer on Friday.

USD Surges as Markets Back March Fed Rate Hike

Bank of Canada Kept Rate Unchanged at 0.50%

USD/CAD Fundamentals

Thursday (March 2)

• 8:30 Canadian GDP. Estimate 0.3%. Actual 0.3%
• 8:30 US Unemployment Claims. Estimate 243K. Actual 223K
• 10:30 US Natural Gas Storage. Estimate -5B
• 13:00 BoC Deputy Governor Timothy Lane Speech

Upcoming Key Events

Friday (March 3)

• 10:00 ISM Non-Manufacturing PMI. Estimate 56.5
• 13:00 Federal Reserve Chair Janet Yellen Speech

*All release times are GMT

*Key events are in bold

USD/CAD for Thursday, March 2, 2017

USD/CAD March 2 at 8:40 EST

Open: 1.3353 High: 1.3385 Low: 1.3334 Close: 1.3352

USD/CAD Technical

• USD/CAD was flat in the Asian session. In European trade, the pair edged up but retracted. USD/CAD is choppy early in the North American session
• 1.3253 is providing support
• 1.3371 was tested earlier in resistance and remains a weak line

Further levels in both directions:

• Below: 1.3253, 1.3120, 1.3003 and 1.2922
• Above: 1.3371, 1.3461 and 1.3551
• Current range: 1.3253 to 1.3371

OANDA’s Open Positions Ratio

USD/CAD ratio is showing slight movement towards long positions. Currently, long positions have a strong majority (67%), indicative of trader bias towards USD/CAD continuing to move higher.

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.

USD/CAD is unchanged in the Thursday session. Currently, the pair is trading at 1.3340. On the release front, the US releases Final GDP, with an estimate of 2.0%, compared to Preliminary GDP which came in at 1.9%. We’ll also get a look at unemployment claims. There are no Canadian events on the schedule. On Friday, Canada releases GDP, with the estimate standing at 0.3%. The US releases UoM Consumer Sentiment, which is expected to improve to 97.8 points.

What’s next for the Bank of Canada? On Tuesday, BoC Governor Stephen Poloz hinted that the BoC would not be raising interest rates in the near future, saying that the Canadian economy had not yet recovered from the huge drop in oil prices. He added that raising interests rates back to “normal” would have a negative effect on the economy and would likely trigger a recession. The last time the BoE raised rates was in 2010, and analysts don’t forecast another hike before 2018. President Trump’s “America first” stance is a serious concern for Canada, which is heavily reliant on open trade. Poloz criticized Trump’s protectionist agenda, saying that “protectionism does not promote growth and its costs are steep”.

It’s been a rough start for the Trump administration, which has been beset by controversy and crises. Trump, who has been in office for more than two months, has yet to provide any details of an economic policy, to the consternation of the markets. Last week, Trump’s proposed healthcare bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.

USD/CAD Fundamentals

Thursday (March 30)

• 8:30 Canadian RMPI. Estimate 0.8%
• 8:30 Canadian IPPI. Estimate 0.4%
• 8:30 US Final GDP. Estimate 2.0%
• 8:30 US Unemployment Claims. Estimate 244K
• 8:30 US Final GDP Price Index. Estimate 2.0%
• 10:30 US Natural Gas Storage. Estimate -37B
• 11:00 US FOMC Member Robert Kaplan Speech

Upcoming Key Events

Friday (March 31)

• 8:30 Canadian GDP. Estimate 0.3%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 97.8

*All release times are GMT

*Key events are in bold

USD/CAD for Thursday, March 30, 2017

USD/CAD March 30 at 7:00 EST

Open: 1.3332 High: 1.3345 Low: 1.3325 Close: 1.3339

USD/CAD Technical

• USD/CAD is mostly flat in the Asian and European sessions
• 1.3253 is providing support
• 1.3371 is a weak resistance line

Further levels in both directions:

• Below: 1.3253, 1.3120 and 1.3006
• Above: 1.3371, 1.3461, 1.3551 and 1.3672
• Current range: 1.3253 to 1.3371

OANDA’s Open Positions Ratio

USD/CAD ratio is showing movement towards long positions. Currently, short positions have a majority (54%), indicative of trader bias towards USD/CAD breaking out and moving lower.

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.

USD/CAD has edged higher in the Friday session. Currently, the pair is trading at 1.3350. On the release front, Canada releases GDP for January, which is expected to remain unchanged at 0.3%. In the US, today’s highlight is UoM Consumer Sentiment, with the estimate standing at 97.8 points.

What’s next for the Bank of Canada? On Tuesday, BoC Governor Stephen Poloz hinted that the BoC would not be raising interest rates in the near future, saying that the Canadian economy had not yet recovered from the huge drop in oil prices. He added that raising interests rates back to “normal” would have a negative effect on the economy and would likely trigger a recession. The last time the BoE raised rates was in 2010, and analysts don’t forecast another hike before 2018. President Trump’s “America first” stance is a serious concern for Canada, which is heavily reliant on open trade. Poloz criticized Trump’s protectionist agenda, saying that “protectionism does not promote growth and its costs are steep”.

Since Donald Trump assumed office in January, his administration has been beset by controversy and crises. Trump has yet to provide any details of an economic policy, much to the consternation of the markets. Last week, Trump’s proposed healthcare bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.

USD/CAD Fundamentals

Friday (March 31)

• 8:30 Canadian GDP. Estimate 0.3%
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate 0.2%
• 8:30 US Personal Income. Estimate 0.4%
• 9:00 US FOMC Member William Dudley Speech
• 9:45 US Chicago PMI. Estimate 57.2
• 10:00 US Member Neel Kashkari Speech
• 10:00 US Revised UoM Consumer Sentiment. Estimate 97.8
• 10:00 US Revised UoM Inflation Expectations

*All release times are GMT

*Key events are in bold

USD/CAD for Friday, March 31, 2017

USD/CAD March 31 at 8:05 EST

Open: 1.3331 High: 1.3368 Low: 1.3325 Close: 1.3348

USD/CAD Technical

• USD/CAD has ticked higher in the Asian and European sessions
• 1.3253 is providing support
• 1.3371 remains a weak resistance line

Further levels in both directions:

• Below: 1.3253, 1.3120 and 1.3006
• Above: 1.3371, 1.3461, 1.3551 and 1.3672
• Current range: 1.3253 to 1.3371

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Friday session. Currently, short positions have a majority (55%), indicative of trader bias towards USD/CAD breaking out and moving lower.

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.

The Canadian dollar had a negative trading session on Monday. The loonie was pressured downwards as the price of oil retreated and the USD advanced on the hopes President Trump will present a tax reform plan this week. The results of the first round of French presidential elections sparked an appetite in riskier assets hurting Canadian bonds as investors sold fixed income looking for higher yields.

Canadian wholesale data showed a step back of 0.2 percent in February. This is the first contraction after four straight months of gains. The forecast had anticipated a larger drop but the indicator did little to help the dollar. Wednesday’s release of retail sales will have a higher impact as the gap between the US and the Canadian economy widens.

The USD/CAD gained 0.095 in the Monday trading session. The currency pair is trading at 1.3509 after the USD got a boost from comments from US President Donald Trump to seek a 15 percent corporate tax rate as part of other tax cut to be unveiled on Wednesday. The Trump administration has yet failed to deliver on the optimism created after the election opting to push Immigration and Health care reforms ahead of the tax and infrastructure spending policies.

US Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn will head to Washington to talk to Senate Majority Leader and the House Speaker. With talk of the debt ceiling approaching and the aftermath of the healthcare reform fiasco, a tax reform should get more support from the republican base but only if it promises to deliver on the pro-growth agenda.ft.coft

The price of West Texas fell 0.645 percent in the last 24 hours. The barrel of WTI is trading at $48.86 despite the best efforts of the Organization of the Petroleum Exporting Countries (OPEC) to signal that an extension to the production cut deal is imminent. Oversupply continues to push the price of oil lower with US shale producers ramping up the number of drilling operations.

Market events to watch this week:

Tuesday, April 25
10:00am USD CB Consumer Confidence
9:30pm AUD CPI q/q
Wednesday, April 26
8:30am CAD Core Retail Sales m/m
10:30am USD Crude Oil Inventories
11:50pm JPY Monetary Policy Statement
Thursday, April 27
Tentative JPY BOJ Outlook Report
Tentative JPY BOJ Policy Rate
2:30am JPY BOJ Press Conference
7:45am EUR Minimum Bid Rate
8:30am EUR ECB Press Conference
8:30am USD Core Durable Goods Orders m/m
8:30am USD Unemployment Claims
Friday, April 28
4:30am GBP Prelim GDP q/q
8:30am CAD GDP m/m
8:30am USD Advance GDP q/q

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

The Canadian dollar depreciated on Thursday against the US dollar after US economic releases were positive and gross domestic product (GDP) forecasts were upgraded for the second quarter. The Trump administration has also put forth a plan to get the much awaited tax reform policy plan in motion. Trump had promised tax reforms and infrastructure spending out of the gate of his presidency, but had so far put higher priority in more divisive issues. The pro-growth policy and the decision to drop the border tax shows a willingness from Republicans to abandon the controversial measures to assure a tax overhaul.

The US Bureau of Economic Analysis will publish the first estimate of second quarter gross domestic product (GDP) on Friday, July 28 at 8:30 am EDT. The market is forecasting a 2.5 percent gain in the advanced 2Q GDP figures. Growth is anticipated to have accelerated after a disappointing first quarter pace of 1.4 percent. A print below the forecast would be seen as a negative for the USD with the Atlanta Fed upgrading its forecast on Thursday from 2.5 percent to 2.8 percent.

A strong rebound in GDP growth would put the dovish FOMC statement into perspective. The concerns about low inflation were blown out of proportion in the Fed communication but could go either way if the growth of the US economy disappoints on Friday. The loonie has appreciated this year thanks to strong Canadian fundamentals and the quick hawkish turn form the Bank of Canada (BoC) that translated into a rate hike in July.

The USD/CAD gained 0.881 percent on Thursday. The currency pair is trading at 1.2556 after the USD rebounded following an improved GDP forecast and the Trump administration getting back on track to pass the promised tax reform. The loonie fell with no support from economic releases and despite the rise of oil prices.

The release of the first estimate of second quarter US GDP tomorrow at 8:30 am EDT will be the the highlight of the trading session. At the same time Canadian monthly data will be released. The US is anticipated to have grown close to 2.5 percent while Canadian monthly GDP gains are expected at 0.2 percent matching last month’s release.

Economic indicators have been mixed for the US economy. The U.S. Federal Reserve hiked the benchmark interest rate in June, but is awaiting signs of accelerated growth before committing to a third rate hike this year. Inflation in the United States remain weak but if employment and growth keep their pace of growth the central bank will hike as planned. A slowdown in the progress of the US economy would trigger a more dovish Fed which could put the dollar under downward pressure.

Oil prices were behind the decision from the Bank of Canada (BoC) to cut interest rates back in 2015 so with the stability provided by the Organization of the Petroleum Exporting Countries (OPEC) and other producers limiting output it makes sense to bring the rate back to previous levels. There are rumours that the decision did not sit well with the Canadian government as it could cause pain to high debt households. Real estate prices in Vancouver and Toronto have retreated for the moment, but it will take more than 25 basis points to trigger a correction. The central bank could follow through with another hike before the end of the year to bring rates back to 2015 levels and also keep the gap between American and Canadian rates to widen.

The price of energy has gained 1.138 percent on Thursday. West Texas Intermediate is trading at $48.83 on a volatile session where crude moved more than two percent intraday. Bigger than expected drawdowns in US inventories and what appears to be a change in strategy from shale drillers as US production is anticipated to slow down has given this round to the producers who agreed to cut production.

The Organization of the Petroleum Exporting Countries (OPEC) and other major producers will continue to limit production until March of 2018 with Saudi Arabia taking a leadership role but asking for more compliance to the agreed levels of production. Disruptions in Libya and Nigeria make them exempt of the deal, but as those issues are sorted production has growth threatening the efforts of the group.

Crude has gained 4.7 percent in the last five days as US production has slowed down as evidenced by shrinking inventories. The OPEC agreement is a long way in reducing the supply glut but so far its efforts have resulted in higher oil prices. Internal dissent and the difficulties of proper production compliance will be a challenge going forward as well as a ramp up from Brazil, Canada and US operations once oil reaches higher price levels.

Market events to watch this week:

Friday, July 28
8:30 am CAD GDP m/m
8:30 am USD Advance GDP q/q

*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

The Canadian dollar appreciated versus the US dollar on Friday after the monthly gross domestic product (GDP) in May tripled forecasts. The rebound in oil production put Canadian growth at 0.6 percent beating a forecast of 0.2 percent. Annual growth is 4.6 percent, the fastest since the year 2000.

At the same time the Canadian GDP data was released the Bureau of Economic Analysis published the first estimate of US GDP. The American economy grew by 2.6 percent in the second quarter, slightly beating expectations. Consumer spending was strong, but wage growth was a disappointment. No inflationary pressure was again present as it has been on employment reports and consumer prices. The main takeaway form the Federal Open Market Committee (FOMC) statement earlier this week was a concern with low inflation that could push back the expected final interest rate hike this year.

The Bank of Canada (BoC) cut twice in 2015 ahead of an anticipated drop in oil prices to offer some support to the economy via a lower currency. With oil prices having achieved some stability following the Organization of the Petroleum Exporting Countries (OPEC) and other major producers agreeing to limit output and the economy on the mend, the central bank has now begun to remove that stimulus. The strong GDP puts an October rate hike firmly on the table that could drive the CAD higher as it closes the interest rate gap with the USD.

The USD/CAD lost 0.734 percent in the last 24 hours. The currency is trading at 1.2446 after a strong monthly GDP figure in Canada boosting the loony ahead of the dollar. The US GDP released at the same time met the forecast but the lack of wage growth is putting more pressure on the Fed to rethink its third interest rate hike of the year. The Federal Reserve has already raised interest rates twice in 2017 and is expected to begin shrinking the balance sheet it accumulated from its QE program in the fall.

Political uncertainty has sapped the momentum out of the USD. The rally at the beginning of the year is gone after the debacle that has been the attempts to pass healthcare reform. The Trump administration is now focusing on tax reform, but it remains to be seen if they have the political capital left after a very contentious period to repeal Obamacare. Pro-growth policies were also one of the factors behind the dollar rally earlier in the year, but as they got reprioritized that shift also hurt the greenback against majors. A back to basics approach with tax reform learning the lessons from the failure to pass healthcare policies could end up boosting the dollar before the end of the year.

The loonie continues to gain versus the dollar in a rally that started when the Bank of Canada policy makers made hawkish comments back in June and compounding rhetoric changed market expectations on Canadian monetary policy. The BoC hiked interest rates in July and given the pace of growth could do so again in October. Another 25 basis points would bring the Canadian interest rate to 1 percent, where it sat prior to the 2015 cuts and a significant drop in oil prices.

The price of energy gained 1.242 percent on Friday. West Texas Intermediate is trading at $49.48 as the price of crude continues to rise. Bigger than expected drawdowns for the past three weeks and comments from US producers hinting at less output has driven prices higher. The OPEC and other major producers had so far limited output but with the US, Brazil and Canada out of the agreement the global supply glut was not being drained fast enough.

Citing a cutback in capital expenditure US operations will take a step back. At the same time Saudi Arabia has said that it will cut its production further and warned members of the production cut agreement that compliance will be more stringent to make sure stability returns to oil prices.

Oil has gained 8.41 percent in the last five days as the US dollar retreat has also made crude more expensive. Large financial institutions have cut forecasts for this year to a range around $60 per barrel. The two month high that WTI is currently sitting in is a good start, but not enough to convince investors the levels are sustainable. The biggest risk to oil prices remains the continued support from OPEC and other major producers. Infighting inside the OPEC could escalate and tear the organization apart as Saudi Arabia and Iran could take their ideological disputes a step further.

Market events to watch this week:

Tuesday, August 1
12:30 am AUD Cash Rate
12:30 am AUD RBA Rate Statement
4:30 am GBP Manufacturing PMI
10:00 am USD ISM Manufacturing PMI
6:45 pm NZD Employment Change q/q
Wednesday, August 2
4:30 am GBP Construction PMI
8:15 am USD ADP Non-Farm Employment Change
10:30 am USD Crude Oil Inventories
9:30pm AUD Trade Balance
Thursday, August 3
4:30 am GBP Services PMI
7:00 am GBP BOE Inflation Report
7:00 am GBP MPC Official Bank Rate Votes
7:00 am GBP Monetary Policy Summary
7:00 am GBP Official Bank Rate
7:30 am GBP BOE Gov Carney Speaks
8:30 am USD Unemployment Claims
10:00 am USD ISM Non-Manufacturing PMI
9:30 pm AUD RBA Monetary Policy Statement
9:30 pm AUD Retail Sales m/m
Friday, August 4
8:30 am CAD Employment Change
8:30 am CAD Trade Balance
8:30 am USD Average Hourly Earnings m/m
8:30 am USD Non-Farm Employment Change

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

Canada’s economy unexpectedly contracted in August, adding to signs of cooling following a torrid pace of growth in the first half of this year.

Highlights of August GDP Report

Key Takeaways

Most analysts are anticipating a slowdown in the second half of this year after growth was running at a 4 percent clip in the first six months of 2017. Tuesday’s numbers suggest the potential of a more pronounced drop than expected.

If the economy fails to post gains in September, third quarter annualized growth would be on pace for a sub-2 percent increase. Economists surveyed by Bloomberg News are forecasting growth to average 2.1 percent in the second half.

Other Details

Bloomberg

Manufacturing sales rose 0.5% to $53.7 billion in September, reflecting higher sales in the petroleum and coal product industry.

Overall, sales were up in 7 of 21 industries, representing 28.9% of the Canadian manufacturing sector. Sales of non-durable goods rose 1.7% to $25.4 billion, while sales of durable goods decreased 0.5% to $28.4 billion.

In constant dollars, sales increased 0.7%, indicating that higher volumes of manufactured goods were sold in September.

Petroleum and coal product sales lead the gains

Sales in the petroleum and coal product industry grew 10.3% to $5.5 billion in September, the third consecutive monthly gain. The increase reflected gains in prices and volumes for petroleum and coal product. After removing the effect of price changes, sales in volume terms increased 6.7% in September.

Sales in current dollars also increased in the machinery (+1.9%) and paper (+1.0%) industries. Sales in constant dollars for these industries increased 2.1% and 1.4%, respectively, indicating that higher volumes of goods sold were responsible for the gains.

Partially offsetting these increases in current dollars were declines in the food and transportation equipment industries. Sales in the food industry were down 1.0% to $8.4 billion in September. Widespread decreases in sales were reported, and reflected lower prices and volumes. After removing price effects, sales volumes of the food industry declined 0.4% in September.

Overall sales in the transportation equipment industry declined 0.7% to $10.3 billion, although increases in the railroad rolling stock industry (+66.8%), other transportation equipment (+36.5%) and aerospace product and parts (+5.6%) were posted in September. These gains were not sufficient to offset decreases in the motor vehicle (-5.9%) and motor vehicle parts (-2.5%) industries. After removing price effects, volumes sold declined by 4.5% and 1.2% respectively in these industries, following strong volumes in August.

Manufacturing sales up in seven provinces

Sales rose in seven provinces in September, led by Quebec and New Brunswick.

Manufacturing sales in Quebec rose 1.7% to $13.3 billion, their highest value on record. The growth in September was largely attributable to the petroleum and coal (+24.9%) and the aerospace product and parts (+10.3%) industries. The increases were partly offset by a 2.8% decline in the food industry.

In New Brunswick, manufacturing sales rose 13.1% to $1.7 billion. This was their highest level since November 2014 and reflected higher sales of non-durable goods.

After increasing 2.3% in August, sales in Ontario fell 0.9% to $24.4 billion in September. The decline was largely attributable to lower sales in the motor vehicle (-6.3%), motor vehicle parts (-2.7%) and primary metal (-3.6%) industries. These decreases were partially offset by a 5.0% increase in sales in the machinery industry.

In Alberta, sales declined 0.9% to $5.8 billion, following a 1.6% increase in August. The overall decline in September was largely driven by lower sales in the food product (-4.3%) and chemical (-2.7%) industries.

Inventory levels decline

Inventory levels fell for the fourth consecutive month, down 0.7% to $73.3 billion in September. Inventories were down in 10 of 21 industries, led by the transportation equipment (-2.8%), primary metal (-2.0%) and machinery (-1.7%) industries. These decreases were partially offset by a 4.1% rise in the petroleum and coal product industry.

The inventory-to-sales ratio fell from 1.38 in August to 1.36 in September. The inventory-to-sales ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Unfilled orders decrease

Unfilled orders declined 1.1% to $85.1 billion in September. Most of the decrease was attributable to a drop in unfilled orders in the aerospace product and parts industry, as well as the other transportation equipment industry.

These declines were partially offset by an increase in unfilled orders in the motor vehicle and machinery industries.

New orders decreased 1.7% to $52.8 billion, following a 5.2% gain in August. The decline was mainly attributable to fewer new orders in the aerospace product and parts industry and in the motor vehicle industry. The decrease was partially offset by higher new orders in the petroleum and coal product industry.

StatsCanada