USD/CAD: Canadian Dollar Unchanged, Building Permits Sparkles

 | Dec 08, 2016 09:06

The Canadian dollar is unchanged in the Thursday session. In North American trade, USD/CAD is trading at 1.3230. On the release front, US unemployment claims matched the estimate, dropping to 258 thousand. In Canada, Building Permits sparkled with a gain of 8.7%, crushing the forecast of 1.6%. Housing Starts dipped to 184 thousand, shy of the forecast of 191 thousand. On Friday, the US releases UoM Consumer Sentiment Index.

As expected, the Bank of Canada stayed on the sidelines and left the benchmark rate at 0.50%. The Canadian dollar, which is sensitive to oil prices, was buoyed by the unexpected OPEC production agreement, which triggered a surge in crude prices. The improvement in the Canadian dollar eased pressure on the BoC to lower rates. The BoC had predicted third quarter growth of 3.2%, but the economy beat this projection, expanding at a clip of 3.5%.

The Federal Reserve meets next week for its monthly policy meeting, the first after Donald Trump’s election as president. The markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and market anticipation of a hike has translated into strong gains for the greenback.

It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has stated that he plans to increase government spending and cut taxes, which could lead to higher inflation levels. The Fed has indicated that it plans to raise rates gradually in 2017, but this could change once the new administration’s economic policies become clearer.

USD/CAD Fundamentals

Thursday (December 8)

  • 13:13 Canadian Housing Starts. Estimate 191K. Actual 184K
  • 13:30 Canadian Building Permits. Estimate 1.6%. Actual 8.7%
  • 13:30 Canadian NHPI. Estimate 0.2%. Actual 0.4%
  • 13:30 Canadian Capacity Utilization Rate. Estimate 81.6%. Actual 81.9%
  • 13:30 US Unemployment Claims. Estimate 258K. Actual 258K
  • 15:30 US Natural Gas Storage Estimate -44B

Friday (December 9)

  • 15:00 US Preliminary UoM Consumer Sentiment. Estimate 94.3

*All release times are EST

*Key events are in bold

USD/CAD for Thursday, December 8, 2016