USD/CAD – Canadian Dollar Dips, Wholesale Sales Next

The Canadian dollar has recorded slight losses in the Tuesday session. Currently, USD/CAD is trading at 1.2606, up 0.37% on the day. On the release front, it’s a very light day. There are no US releases on the schedule. The sole Canadian indicator, Wholesale Sales, is expected to slow to 0.4%. On Wednesday, the Federal Reserve will release the minutes of its January meeting. As well, the US will release Existing Home Sales.

It’s been an eventful few weeks for Jerome Powell, who has just commenced his stint as chair of the Federal Reserve. Strong US data in recent weeks has raised speculation that the Fed may need to accelerate the pace of interest rate hikes in 2018. The Fed is currently projecting three rate hikes this year, but if inflation continues to move upwards, many analysts are expecting that the Fed could press the rate trigger four, or even five times in 2018. Meanwhile, concern over higher inflation and more rate hikes sent the stock markets into a frenzy earlier in February. Powell sought to reassure the markets that the Fed was monitoring the situation, but it’s doubtful that the Fed can do much to prevent volatility in the markets.

Virtual currencies have seen wild fluctuations in recent months. Bitcoin, for example, has fluctuated this year between $900 and $19,000. There are growing calls for these currencies to be regulated, and central banks could play a key role in such a move. However, last week, ECB President Mario Draghi poured cold water on any ECB involvement, saying that it was not the ECB’s responsibility to ban or regulate Bitcoin. Draghi added that the ECB was exploring the use of blockchain, a digital technology to monitor bitcoin transactions. Still, with Bitcoin gaining more and more popularity, lawmakers are paying more attention to the negative impact that virtual currencies can have on the economy. In the US, there is bipartisan support in Congress to adopt new rules to regulate virtual currencies, so the days of the ‘wild wild West’ in virtual currency trading may be numbered.

Higher Yields Pushing Dollar Up

USD/CAD Fundamentals

Tuesday (February 20)

• 8:30 Canadian Wholesale Sales. Estimate 0.4%

Wednesday (February 21)

• 9:45 US Flash Manufacturing PMI. Estimate 55.4
• 9:45 US Flash Services PMI. Estimate 53.8
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

USD/CAD for Tuesday, February 20, 2018

USD/CAD, February 20 at 8:05 EST

Open: 1.2561 High: 1.2605 Low: 1.2557 Close: 1.2592

USD/CAD Technical

USD/CAD has posted small gains in the Asian and European sessions

• 1.2494 is providing support
• 1.2630 is a weak resistance line
• Current range: 1.2494 to 1.2630

Further levels in both directions:

• Below: 1.2494, 1.2351, 1.2190 and 1.2060
• Above: 1.2630, 1.2757 and 1.2855

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little movement in the Tuesday session. Currently, short and long positions are evenly split, indicative of a lack of trader bias as to which direction USD/CAD will take next.

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.