USD/CAD: Canadian Dollar Steady

 | May 17, 2018 10:13

The Canadian dollar is steady in the Thursday session, after posting gains on Wednesday. Currently, USD/CAD is trading at 1.2778, down 0.10% on the day. In economic news, Canada releases Foreign Securities Purchases and ADP Nonfarm Employment Change. In the U.S, the Philly Fed Manufacturing Index is expected to drop to 21.2, while unemployment claims are forecast to rise to 216,000.

Negotiations over a new NAFTA agreement have failed to reach a conclusion, and the parties haven’t even reached an ‘agreement in principle.’ Although there is no official deadline to wrap up a deal, there are upcoming events that could mean that a deal won’t be made in 2018. Mexico holds general elections in June and the U.S. holds congressional mid-term elections in November. Meanwhile, the Trump administration has given both Canada and Mexico another 30-day exemption on steel and aluminum tariffs, lasting until June 1. Earlier in the week, U.S. Commerce Secretary Wilbur Ross said that further extensions could be granted, depending on the progress made in the NAFTA talks. Ottawa has demanded “full and permanent” exemptions from the tariffs, but may have to cough up more concessions in the NAFTA talks in order to convince Washington to exempt Canadian steel and aluminum imports from tariffs.

The U.S. economy continues to perform well, but the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. The odds of a rate hike at the June hike stands close to 100%, and the U.S. dollar could continue to make broad gains as we get closer to the June policy meeting.

USD/CAD Fundamentals

Thursday (May 17)

  • 8:30 Canadian Foreign Securities Purchases. Estimate 3.00B
  • 8:30 Canadian ADP Nonfarm Employment Change
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
  • 8:30 US Unemployment Claims. Estimate 219K
  • 10:00 US CB Leading Index. Estimate 0.4%
  • 10:30 US Natural Gas Storage. Estimate 105B

Friday (May 18)

  • 8:30 Canadian CPI. Estimate 0.3%
  • 8:30 Canadian Core Retail Sales. Estimate 0.5%
  • 8:30 Canadian Retail Sales. Estimate 0.3%

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, May 17, 2018