USD/CAD – Canadian dollar dips after soft GDP, NAFTA talks continue

The Canadian dollar has reversed directions on Thursday and posted considerable losses. In the North American session, USD/CAD is trading at 1.2997, up 0.69% on the day. On the release front, Canadian GDP dipped to 0.0%, shy of the estimate of 0.1%. In the U.S, Core PCE Price Index edged up to 0.2%, while Personal Spending remained pegged at 0.4%. Both of these indicators matched the estimates. Unemployment claims rose to 213 thousand, just below the forecast of 214 thousand.

Canada’s economy remained flat in June, with a disappointing reading of 0.0%. Second quarter growth climbed 2.9% at an annualized rate, shy of the estimate of 3.0%. The soft reading has sent the Canadian dollar lower on Thursday, after four consecutive winning sessions. At the same time, growth in Q2 improved significantly over the previous quarter, which recorded growth of just 1.4%. Meanwhile, NAFTA remains in the spotlight, with senior officials from both the U.S and Canada saying that a new NAFTA pact could be signed as early as Friday. Earlier in the week, Mexico and the U.S reached a new trade agreement, and Canada is expected to follow suit, after months of negotiations.

The U.S economy continues to fire on all cylinders. GDP for Q2 was revised upwards to 4.2%, edging above the estimate of 4.0%. This reading was above the initial GDP release of 4.1% back in July. Growth in the second quarter was much stronger than in Q1, which posted a gain of 2.2%. Will the strong data continue in the third quarter? Consumer spending has been strong early in the quarter, but housing data has disappointed, with recent key indicators missing expectations.

USD/CAD Canadian Dollar Lower as NAFTA Deadline Approaches

USD/CAD Fundamentals

Thursday (August 30)

• 8:30 Canadian GDP. Estimate 0.1%. Actual 0.0%
• 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
• 8:30 US Personal Spending. Estimate 0.4%. Actual 0.4%
• 8:30 US Personal Income. Estimate 0.3%. Actual 0.3%
• 8:30 US Unemployment Claims. Estimate 214K. Actual 213K
• 10:30 US Natural Gas Storage. Estimate 58B

Friday (August 31)

• 8:30 Canadian RMPI. Estimate 0.0%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 95.5

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, August 30, 2018

USD/CAD, August 30 at 10:05 DST

Open: 1.2909 High: 1.2990 Low: 1.2903 Close: 1.2997

USD/CAD Technical

USD/CAD ticked higher in the Asian session and was flat in European trade. The pair has posted considerable gains in the North American session

• 1.2970 has switched to a support level after gains by USD/CAD on Thursday
• 1.3067 is the next resistance line
• Current range: 1.2970 to 1.3067

Further levels in both directions:

• Below: 1.2970, 1.2831, 1.2733 and 1.2666
• Above: 1.3067, 1.3160 and 1.3292

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