USD/CAD – Canadian Dollar in Holding Pattern Ahead of GDP

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.

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