USD/CAD: Canadian Dollar Drops To 2-Month Low, BoC Rate Announcement Next
Kenny Fisher | May 29, 2018 09:51
The Canadian dollar continues to lose ground and has recorded losses for a sixth consecutive day. In Tuesday’s North American session, USD/CAD is trading at 1.3019, up 0.36% on the day. On the release front, there are no Canadian indicators. The U.S. releases CB Consumer Confidence, which is expected to dip to 128.0 points. On Wednesday, there are a host of key indicators. Canada will release Current Account and the Raw Materials Price Index, and the U.S. publishes ADP nonfarm payrolls and Preliminary GDP.
The Canadian dollar remains under pressure this week. The currency has declined 1.4 percent in the month of May and is currently at its lowest level since mid-March. There could be further headwinds for the dollar this week, if, as expected, the Bank of Canada holds interest rates at 1.25 percent. Inflation has moved closer to the BoC target of 2 percent and economic growth has been steady, so the bank may opt for the sidelines when policy-makers meet on Wednesday. However, with the Federal Reserve widely expected to raise rates next month, the Canadian dollar will be less attractive to investors. Meanwhile, the growing political crisis in Europe has unnerved investors, which could hurt minor currencies like the Canadian dollar, which tends to lose ground when risk appetite is weak.
Is the summit on or off? The drama and uncertainty continue to swirl around the upcoming summit between U.S. President Donald Trump and North Korean leader Kim Jong-un, which may or may not take place on June 12 in Singapore. Just a few days ago, Trump sent a letter to Kim, saying that Trump was cancelling the much-anticipated meeting. However, the White House has since sent a team to Singapore and a senior North Korean official is on his way to Washington to meet with Secretary of State Mike Pompeo. These moves have fuelled speculation that the summit will take place, although curiously, neither side has confirmed this.
USD/CAD Fundamentals
Tuesday (May 29)
- 9:00 US S&P/CS Composite-20 HPI. Estimate 6.5%
- 10:00 US CB Consumer Confidence. Estimate 128.2
Wednesday (May 30)
- 8:15 US ADP Nonfarm Employment Change. Estimate 186K
- 8:30 Canadian Current Account. Estimate -18.2B
- 8:30 Canadian RMPI
- 8:30 Canadian IPPI
- 8:30 US Preliminary GDP. Estimate 2.3%
- 8:30 US Goods Trade Balance. Estimate -71.2B
- 8:30 US Preliminary GDP Price Index. Estimate 2.0%
- 8:30 US Preliminary Wholesale Inventories. Estimate 0.4%
- 10:00 BoC Rate Statement
- 10:00 BoC Overnight Rate. Estimate 1.25%
- 14:00 US Beige Book
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*All release times are DST
*Key events are in bold
USD/CAD for Tuesday, May 29, 2018
USD/CAD, May 29 at 8:30 DST
Open: 1.2993 High: 1.3047 Low: 1.2968 Close: 1.3041
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2850 | 1.2943 | 1.3015 | 1.3125 | 1.3273 | 1.3387 |
USD/CAD ticked lower in the Asian session. The pair reversed directions in the European session and has posted gains
- 1.3015 has switched to a support role as USD/CAD has moved upwards on Tuesday
- 1.3125 is the next line of resistance
- Current range: 1.3015 to 1.3125
Further levels in both directions:
- Below: 1.3015, 1.2943, 1.2850 and 1.2757
- Above: 1.3125, 1.3273 and 1.3387
OANDA’s Open Positions Ratio
USD/CAD ratio is unchanged in the Tuesday session. Currently, short positions have a majority (65%), indicative of trader bias towards USD/CAD reversing directions to move downwards.
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