USD/CAD – Canadian Dollar Ticks Higher, US Retail Sales Next

The Canadian dollar is almost unchanged in the Thursday session. Currently, USD/CAD is trading at 1.2864, up 0.05% on the day. On the release front, Canada releases NHPI and Bank of Canada Stephen Poloz speaks at an event in Toronto. In the US, consumer spending indicators are expected to improve in November, with Core Retail Sales and Retail Sales forecast at 0.6% and 0.3%, respectively. Unemployment Claims is expected to tick higher to 237 thousand. On Friday, the US publishes Empires State Manufacturing Index and Canada releases Manufacturing Sales.

The Canadian dollar jumped on the currency bandwagon on Wednesday, as the US dollar was broadly lower after the Federal Reserve rate announcement. Still, the Canadian currency is likely to be under pressure, as the Fed is expected to raise rates again in January. The Bank of Canada may have to follow suit with a rate hike of its own in order to make the Canadian dollar more attractive to investors. Later on Wednesday, Bank of Canada Governor Stephen Poloz will be speaking in Toronto, and investors will be looking for hints as to future rate hikes.

There were no surprises from the Federal Reserve, which raised rates on Wednesday, bringing the benchmark rate to a range between 1.25% and 1.50%. This marked the third rate hike in 2017, testimony to the strong performance of the US economy. The Fed statement was optimistic about the economy, noting that the labor market “remained strong”. It also lowered its unemployment forecast in 2018 from 4.1% to 3.9%, and revised growth for 2018 from 2.1% to 2.5%. Despite this rosy prognosis, the US dollar was broadly down after the announcement. Why? One reason is the sore point in the economy – inflation. The Fed has not changed its September forecast for rate hikes next year, with the Fed dot plot indicating that three rate hikes are projected for 2018. This disappointed some investors who would like to see four increases next year. As well, the rate statement said that the Fed did not expect the tax reform legislation to have any long-term effect on the economy, contradicting White House claims that the legislation would trigger substantial growth in the economy.

USD/CAD Fundamentals 

Thursday (December 14)

• 8:30 Canadian NHPI. Estimate 0.2%
• 8:30 US Core Retail  Sales. Estimate 0.6%
• 8:30 US Retail  Sales. Estimate 0.3%
• 8:30 US Unemployment Claims. Estimate 237K
• 8:30 US Import Prices. Estimate 0.7%
• 9:45 US Flash Manufacturing PMI. Estimate 54.0
• 9:45 US Flash Services PMI. Estimate 54.8
• 10:00 US Business Inventories. Estimate -0.1%
• 10:30 US Natural Gas Storage. Estimate -55B

Friday (December 15)

• 8:30 Canadian Manufacturing Sales.  Estimate 0.9%
• 8:30 US Empire State Manufacturing Index. Estimate 18.8

*All release times are GMT

*Key events are in bold

USD/CAD for Thursday, December 14, 2017

USD/CAD, December 14 at 8:00 EDT

Open: 1.2818 High: 1.2866 Low: 1.2800 Close: 1.2824

USD/CAD Technical

USD/CAD showed limited movement in the Asian session. In European trade, the pair posted considerable gains but has given up most of those gains

• 1.2757 is providing support
• 1.2860 was tested earlier in resistance
• Current range: 1.2757 to 1.2860

Further levels in both directions:

• Below: 1.2757, 1.2630, 1,2494, and 1.2368
• Above: 1.2860, 1.3015 and 1.3161

OANDA’s Open Positions Ratio

USD/CAD ratio remains unchanged this week. Currently, long positions have a majority (52%), indicative of slight trader bias towards USD/CAD breaking out and moving higher.

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.