Canadian Dollar Subdued Ahead of US GDP

The Canadian dollar is trading sideways in the Wednesday session. Currently, USD/CAD is trading at 1.2877, down 0.11% on the day. On the release front, there are no Canadian indicators for a third straight day. In the US, Final GDP is expected to be revised upwards to 2.7%, after the initial reading of 2.5% back in February. US Pending Homes is forecast to rebound with a strong gain of 2.1%. On Thursday, US unemployment claims is forecast to tick up to 230 thousand, and UoM Consumer Sentiment is predicted to climb to 101.9 points. Canada will release the monthly GDP report.

The tariff dispute between the US and China has shaken up global stock markets and also caused volatility in the currency markets. The US dollar recorded losses last week, after President Trump’s dramatic announcement that he was imposing stiff tariffs on up to $60 billion in Chinese imports. China vowed to retaliate and slap imports on a range of US products. This move came on the heels of a blanket US tariff on steel imports. Although Trump backtracked and exempted Canada, Mexico and other countries from the steel tariffs, the threat of a global trading war has unnerved investors. This week, however, China was singing a more conciliatory tune, saying it would apply to the World Trade Organization to overturn the tariffs. The US has imposed the tariffs under a national security provision, but China has argued that the move is a trade barrier with the intent of protecting domestic producers. Although the dispute has not been resolved, the Chinese move has eased tensions and restored investor risk appetite, in the hope that both the US and China will climb down from their trees and reach some agreement instead of imposing tariffs on each other.

Negotiations over the NAFTA agreement continue, and positive statements from US negotiators have raised hopes that a new agreement will be reached between Canada, Mexico and the US. A key sticking point has been a US demand to increase the US content in vehicles made in NAFTA members, but the Trump administration has apparently backed down on this requirement. The gloomy air around the talks has improved, and there is cautious optimism that the sides can hammer out a new agreement in the next few weeks.

USD/CAD Fundamentals

 Wednesday (March 28)

• 8:30 US Final GDP. Estimate 2.7%
• 8:30 US Final GDP Price Index. Estimate 2.3%
• 8:30 US Goods Trade Balance. Estimate -74.1B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.6%
• 10:00 US Pending Home Sales. Estimate 2.1%
• 10:30 US Crude Oil Inventories
• 12:00 US FOMC Member Raphael Bostic Speaks

 Thursday (March 29)

• 8:30 Canadian GDP. Estimate 0.1%
• 8:30 Canadian RMPI. Estimate 2.8%
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate 0.2%
• 8:30 US Unemployment Claims Estimate 230K
• 9:45 Chicago PMI. Estimate 62.1
• 10:00 US Revised UoM Consumer Sentiment. Estimate 101.9

*All release times are GMT

*Key events are in bold

USD/CAD for Wednesday, March 28, 2018

USD/CAD, March 28 at 7:55 EST

Open: 1.2890 High: 1.2909 Low: 1.2863 Close: 1.2877

USD/CAD Technical

USD/CAD was flat in the Asian session. In European trade, the pair edged higher but then retracted

• 1.2850 is a weak support line
• 1.2930 in the next resistance line
• Current range: 1.2850 to 1.2930

Further levels in both directions:

• Below: 1.2850, 1.2757 and 1.2687
• Above: 1.2930, 1.3050, 1.3165 and 1.3260

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little movement this week. Currently, short positions have a majority (56%), indicative of USD/CAD continuing to move 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.