USD/CAD: Canadian Dollar Steady As GDP Beats Estimate

The Canadian dollar continues to gain ground in the Thursday session, after posting sharp gains on Wednesday. In the North American session, is trading at 1.2845, down 0.24% on the day. On the release front, Canada’s in March dropped to 0.3%, edging above the estimate of 0.2%. In the U.S., and both beat their estimates. Unemployment claims dropped sharply to 221,000, beating the estimate of 228,000. On Friday, the focus will be on employment data, with the release of nonfarm payrolls and wage growth.

It’s been an impressive turnaround for the Canadian dollar in mid-week, as the currency jumped 1.1% on Wednesday. The currency climbed on a positive view of the economy from the Bank of Canada. The bank statement noted that inflation was higher than expected and the export sector remained robust. As expected, the bank maintained the benchmark rate at 1.25 percent. Inflation has moved closer to the BoC target of 2 percent and economic growth has been steady, so the BoC will be giving serious consideration to a rate hike this summer. Some analysts are even predicting that the bank will raise rates twice in the second half of 2018.

The markets continue to keep a close eye on the “on-again off-again” summit between the U.S. and North Korean leaders. U.S. President Donald Trump and North Korean leader Kim Jong-un are scheduled to meet in Singapore on June 12, but curiously, neither side will confirm whether the meeting is on. The White House has strongly hinted that the summit will take place, saying that the U.S. continues to “actively prepare for President Trump’s expected summit with leader Kim in Singapore.” There is a flurry of activity around the summit – Trump has sent a team to Singapore and a senior North Korean official will meet with senior U.S. officials on Wednesday. If Trump tweets out that the summit is on, investor sentiment could soar and boost the Canadian dollar.

USD/CAD Fundamentals

Thursday (May 31)

  • 7:30 US Challenger Job Cuts. Actual -4.8%
  • 8:30 Canadian GDP. Estimate 0.2%. Actual 0.3%
  • 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.2%
  • 8:30 US Personal Spending. Estimate 0.4%. Actual 0.6%
  • 8:30 US Unemployment Claims. Estimate 228K. Actual 221K
  • 8:30 US Personal Income. Estimate 0.3%. Actual 0.3%
  • 9:45 US Chicago PMI. Estimate 58.2
  • 10:00 US Pending Home Sales. Estimate 0.4%
  • 10:30 US Storage. Estimate 100B
  • 11:00 US Inventories. Estimate -0.4M
  • 12:45 US FOMC Member Rafael Bostic Speaks
  • 13:00 US FOMC Member Lael Brainard Speaks

Friday (June 1)

  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 189K
  • 8:30 US Unemployment Rate. Estimate 3.9%
  • 10:00 US ISM Manufacturing PMI. Estimate 58.2

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, May 31, 2018

USD/CAD for May 30-June 1, 2018.

USD/CAD for May 30-June 1, 2018.

USD/CAD, May 31 at 8:40 DST

Open: 1.2876 High: 1.2895 Low: 1.2818 Close: 1.2840

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2544 1.2614 1.2757 1.2850 1.2943 1.3015

The Canadian dollar continues to break through support levels. USD/CAD ticked higher in the Asian session. The pair has posted losses in the European session

  • 1.2757 is providing support
  • 1.2850 is under pressure in resistance
  • Current range: 1.2757 to 1.2850

Further levels in both directions:

  • Below: 1.2850 and 1.2757, 1.2614 and 1.2544
  • Above: 1.2850, 1.2943, 1.3015 and 1.3125

OANDA’s Open Positions Ratio

USD/CAD ratio continues to show movement towards long positions, consistent with the losses that USD/CAD has recorded on Wednesday. Currently, short positions have a majority (56%), indicative of trader bias towards USD/CAD continuing to move downwards.

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.

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