Kenny Fisher | Jan 11, 2019 09:57
It’s been an excellent week for the Canadian dollar, and the currency has posted slight gains on Friday. In the North American session, the pair is trading at 1.3215, down 0.16% on the day. On the release front, there are no Canadian events. Investors are bracing for weak inflation numbers out of the United States. CPI is expected to drop to -0.1%, while Core CPI is forecast to remain steady at 0.1%.
The Federal Reserve is sounding much more dovish of late, after a hawkish rate statement in December sent equity markets plunging in late December. The minutes from that meeting noted that low inflation levels meant that the Fed could “afford to be patient about further policy firming.” Even more striking, the minutes revealed that at the December meeting, some policy-makers opposed a rate hike, arguing that inflation was too low to warrant higher rates. The U.S. dollar responded to the minutes with broad losses on Wednesday. On Thursday, Fed Chair Jerome Powell said he was “very worried” about the massive U.S. debt and reiterated that the Fed would remain patient on monetary policy. Given that further interest rate hikes would hurt the debt burden of corporate borrowers, Powell’s remarks on the debt could be a sign that the Fed will take a pause on rate hikes in the near future, and perhaps even entertain a rate cut this year.
The Bank of Canada held the benchmark rate at 1.75% on Wednesday, which is unchanged since October. The bank policy statement was somewhat on the dovish side, as policy-makers highlighted their concerns for the economy. These included low oil prices, an overpriced housing market and the global trade war. The Canadian economy is highly dependent on exports, and a weaker global economy has put a crimp in the export sector. The Canadian dollar had a dismal 2018, falling 8.4%. However, it’s been a stellar January for the currency, which has jumped 3.0%, recovering the losses seen in December. The loonie is sensitive to the movement in equity markets, and higher risk appetite has boosted the currency. The BoC remains cautious, and is likely to hold off on interest rate hikes until the current turmoil in the equity markets eases.
Friday (January 11)
*All release times are EST
*Key events are in bold
USD/CAD for Friday, January 11, 2019
USD/CAD, January 11 at 8:00 EST
Open: 1.3235 High: 1.3245 Low: 1.3183 Close: 1.3215
USD/CAD posted slight losses in the Asian session. In European trade, the pair posted headed lower but has recovered
Further levels in both directions:
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.
Written By: Kenny Fisher
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.