USD/CAD – Canadian Dollar Edges Higher Ahead of BoC Rate Statement

USD/CAD has posted slight losses on Wednesday, as the pair trades at 1.3080. On the release front, the Bank of Canada will set its benchmark interest rate and release a rate statement. As well, BoC Governor Stephen Poloz will testify before a Senate committee in Ottawa. In the US, we’ll get a look at Building Permits and Crude Oil Inventories. On Thursday, the US releases the Philly Fed Manufacturing Index and unemployment claims.

The Canadian dollar continues to rally this week. The currency has gained ground in four straight daily sessions, climbing 1.3% during that time. Canadian Manufacturing Sales posted a sharp 0.9% gain on Tuesday, helping the Canadian dollar continue to point upwards. Next up is the BoC rate announcement, which should be treated as a market-mover. The markets are expecting the benchmark rate to remain at 0.50%, where it has been pegged since May 2015. With the Canadian economy under-performing, the BoC could deliver a dovish statement, which would likely weigh on the Canadian dollar. Canada will release key inflation and retail sales numbers on Friday and the markets are expecting stronger numbers for September.

US consumer inflation numbers were mixed on Tuesday. CPI edged up to 0.3%, up from 0.2% a month earlier. This was the strongest gain since April. Core CPI went the opposite direction, slipping to 0.1%, down from 0.3% a month earlier. These numbers could have an important bearing on the Fed’s interest rate decision in December. Currently, a December rate hike is currently priced in at 64 percent. Meanwhile, US consumer spending impressed in September. Retail sales gained 0.5%, while core retail sales jumped 0.6%, as both key indicators rebounded from declines in August. PPI was steady at 0.3%, but the UoM Consumer Sentiment Index disappointed, dropping to 87.9 points and missing expectations. This marked the weakest reading since September 2015.

USD/CAD Fundamentals

Wednesday (October 19)

• 8:30 US Building Permits. Estimate 1.17M
• 8:30 US Housing Starts. Estimate 1.18M
• 8:30 US Crude Oil Inventories. Estimate 2.2M
• 10:00 BoC Monetary Policy Report
• 10:00 BoC Rate Statement
• 10:00 BoC Overnight Rate. Estimate 0.50%
• 10:30 Crude Oil Inventories. Estimate 2.2M
• 11:15 BoC Press Conference
• 14:00 US Beige Book
• 16:15 BoC Governor Stephen Poloz Speaks
• 19:45 FOMC Member William Dudley Speaks

Upcoming Key Events

Thursday (October 20)

• 8:30 US Philly Fed Manufacturing Index. Estimate 5.2
• 8:30 US Unemployment Claims. Estimate 251K

*All release times are EDT

*Key events are in bold

USD/CAD for Wednesday, October 19, 2016

USD/CAD October 19 at 10:35 GMT

Open: 1.3108 High: 1.3128 Low: 1.3077 Close: 1.3079

USD/CAD Technical

• USD/CAD posted small losses in the Asian session but recovered. The pair has posted slight losses in the European session
• 1.3028 is providing support
•  1.3120 was tested in resistance and is a weak line

Further levels in both directions:

• Below: 1.3028, 1.2922 and 1.2815
• Above: 1.3120, 1.3253, 1.3371 and 1.3457
• Current range: 1.3028 to 1.3120

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged on Tuesday, consistent with a lack of movement from USD/CAD. Currently, short positions have a small majority (52%), indicative of slight trader bias towards USD/CAD continuing to move to lower ground.

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.