USD/CAD – Canadian dollar edges higher, US housing reports next

The Canadian dollar has posted slight losses for a second straight day. In the Tuesday session, USD/CAD is trading at 1.3196, up 0.19% on the day. On the release front, there are no Canadian data releases on the schedule. In the U.S., the focus is on construction numbers. Building Permits is expected to improve to 1.26 million and Housing Permits is also forecast to rise to 1.23 million. On Wednesday, the U.S. releases durable goods orders, unemployment claims and consumer confidence.

The economic forecast calls for further interest rate hikes in the U.S. in 2019, but the pace could be slower than anticipated just a few weeks ago. The U.S economy continues to fire on all cylinders, with unemployment at historically low levels and the $1.5 trillion tax cut package boosting economic growth. However, there are concerns that economic growth could soften in 2019. The U.S-China trade war is expected to take a bite out of U.S growth, and the stimulus from the Trump tax cut will fade over time. GDP has been slowing on an annualized basis – from a sizzling 4.2% in the first quarter, to 3.5% in Q2, with Q3 expected at just 2.7%. The downward trend is expected to continue into 2019, with a growth forecast of 2.0% to 2.5%. If these forecasts materialize, the Fed could decide to raise rates more slowly next year. Many analysts had expected a hike of 25 basis points each quarter, but that could be revised lower to three rates next year. A December hike stands at 70 percent, down from 75% just one week ago. This has made the U.S dollar less attractive to investors and boosted the euro and other major currencies.

The ongoing trade dispute between the U.S. and China shows no signs of being resolved anytime soon, which does not bode well for minor currencies like the Canadian dollar. An Asia-Pacific Economic Cooperation summit in Papua New Guinea ended in discord on Sunday, with leaders unable to agree on a final communique. U.S Vice President Mike Pence, who headed the U.S. delegation, was blunt in his remarks, saying that China would have to drastically change its trade practices before the U.S. would remove current tariffs on $250 billion in Chinese goods.

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USD/CAD Fundamentals

Tuesday (November 20)

• 12:45 BOC Senior Deputy Governor Carolyn Wilkin
• 17:00 BOC Deputy Governor Timothy Lane
• 8:30 US Building Permits. Estimate 1.26M
• 8:30 US Housing Starts. Estimate 1.23M

Wednesday (November 21)

• 8:30 US Core Durable Goods Orders. Estimate 0.4%
• 8:30 US Durable Goods Orders. Estimate -2.2%
• 8:30 US Unemployment Claims. Estimate 215K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.4

*All release times are DST

*Key events are in bold

USD/CAD for Tuesday, November 20, 2018

USD/CAD, November 20 at 8:10 EST

Open: 1.3170 High: 1.3195 Low: 1.3156 Close: 1.3196

USD/CAD Technical

USD/CAD was flat in the Asian session and has edged higher in European trade

• 1.3099 is providing support
• 1.3198 is a weak resistance line. It could break in the North American session
• Current range: 1.3099 to 1.3198

Further levels in both directions:

• Below: 1.3099, 1.2970 and 1.2831
• Above: 1.3198, 1.3292, 1.3383 and 1.3461

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