USD/CAD – Canadian dollar steady, investors eye U.S consumer confidence

The Canadian dollar is trading sideways in the Tuesday session. Currently, USD/CAD is trading at 1.2961, up 0.05% on the day. On the release front, there are no Canadian releases. In the U.S, today’s key indicator is CB Consumer Confidence, which is expected to climb to 132.2 points. On Wednesday, the spotlight will be on the Federal Reserve, which is likely to raise interest rates to a range between 2.00% and 2.25%.

It was another strong week for the Canadian dollar, which posted gains close to 1 percent. USD/CAD dropped to 1.2885 on Thursday, its lowest level since mid-June. The Canadian currency held its own on Friday, despite mixed consumer data. CPI dipped from 3.0% to 2.8% in August, a rare decline. Even with the rare decline, inflation remains well above the BoC target of 2.0%. Retail Sales rebounded with a strong gain of 0.9%, above the estimate of 0.6%. With inflation running above the BoC target, the likelihood of a rate hike when the BoC meets next in October has strengthened.

Trade tensions have escalated this week, with the U.S and China slapping tariffs on each other. On Monday, the U.S imposed tariffs on some $200 billion worth of Chinese goods, while China responded with tariffs of $60 billion on U.S products. There may be more headwinds ahead, as China sharply attacked the U.S, saying it had plunged “a knife to China’s neck” with the new tariffs. The Chinese have canceled trade talks with the Trump administration, and no new talks are likely to be held until the mood improves between the world’s two largest economies. Previous rounds of tariffs between the two economic giants have boosted the U.S dollar, but so far, investors have reacted calmly and have not snapped up the U.S dollar at the expense of other currencies.

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USD/CAD Fundamentals

Tuesday (September 25)

• 9:00 US HPI. Estimate 0.2%
• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.2%
• 10:00 US Consumer Confidence. Estimate 132.2
• 10:00 US Richmond Manufacturing Index. Estimate 22

Wednesday (September 26)

• 10:00 US New Home Sales. Estimate 630K
• 10:30 US Crude Oil Inventories
• 14:00 US FOMC Economic Projections
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <2.25%
• 14:30 FOMC Press Conference

*All release times are DST

*Key events are in bold

USD/CAD for Tuesday, September 25, 2018

USD/CAD, September 25 at 8:15 DST

Open: 1.2916 High: 1.2956 Low: 1.2910 Close: 1.2961

USD/CAD Technical

USD/CAD posted small gains in the Asian session and is choppy in European trade

• 1.2830 is providing support
• 1.2970 is a weak resistance line
• Current range: 1.2830 to 1.2970

Further levels in both directions:

• Below: 1.2830, 1.2666 and 1.2515
• Above: 1.2970, 1.3067, 1.3160 and 1.3292

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