USD/CAD – Canadian Dollar Slips on Trump Comment Over China

The Canadian dollar has posted considerable losses in the Wednesday session. Currently, USD/CAD is trading at 1.2906, up 0.68% on the day. On the release front, there are no Canadian releases on the schedule. In the US, the key event is the Federal Reserve minutes from the May policy meeting. On Thursday, the US will release unemployment claims and Existing Home Sales.

On Tuesday, President Trump sounded skeptical over progress in trade talks between the US and China, saying he was ‘not really’ satisfied with the negotiations. Trump’s comments have confused the markets, as Treasury Secretary Steven Mnuchin declared on the weekend that the trade spat was ‘on hold’. The result? Asian and European stock markets are seeing red in the Wednesday session, as is the Canadian dollar. Investor risk appetite has also waned as there is uncertainty whether North Korean leader Kim Jong-un will meet with President Trump next month. On Tuesday, Trump acknowledged that there was a ‘substantial’ chance that the summit planned with Kim in Singapore on June 12 would not take place.

The Federal Reserve will be in the spotlight on Wednesday, as analysts pore over the minutes of the May policy meeting. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June hike stand at 100%. The markets will be looking for some guidance from the May minutes, and if the message from Fed policymakers is hawkish, traders can expect the US dollar to post gains. On Monday, Atlanta Fed President Raphael Bostic sounded positive about the economy, saying the Fed’s employment and inflation goals were close to being met. The Fed expects growth to be around 2.5% in 2018, and inflation has been moving closer to the Fed target of 2.0%

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USD/CAD Fundamentals

Wednesday (May 23)

• 9:45 US Flash Manufacturing PMI. Estimate 56.6
• 9:45 US Flash Services PMI. Estimate 54.9
• 10:00 US Crude Oil Inventories. Estimate -2.5M
• 14:00 US FOMC Meeting Minutes

Thursday (May 24)

• 8:30 US Unemployment Claims. Estimate 220K
• 10:00 US Existing Home Sales. Estimate 5.56M

*All release times are DST

*Key events are in bold

USD/CAD for Wednesday, May 23, 2018

USD/CAD, May 23 at 7:45 DST

Open: 1.2819 High: 1.2895 Low: 1.2812 Close: 1.2906

USD/CAD Technical

USD/CAD ticked higher in the Asian session and has posted stronger gains in European trade

• 1.2850 has switched to a support role as USD/CAD has moved higher
• 1.2943 is the next resistance line
• Current range: 1.2850 to 1.2943

Further levels in both directions:

• Below: 1.2850, 1.2757, 1.2687 and 1.2527
• Above: 1.2943, 1.3015 and 1.3125

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed directions and is showing movement towards short positions. Currently, short positions have a majority (55%), indicative of trader bias towards USD/CAD reversing directions and moving 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.