USD/CAD – Canadian Dollar Dips as Trump Threatens Tariffs

The Canadian dollar continues to head lower and has posted considerable losses in the Thursday session. Currently, USD/CAD is trading at 1.2905, up 0.55% on the day. On the release front, Canadian Corporate Profits rebounded in the first quarter with a strong gain of 2.7%. In the US, unemployment claims jumped to 234 thousand, its highest level in seven weeks. Later in the day, the US releases Existing Home Sales, which is expected to drop to 5.56 million. On Friday, the US will publish durable goods orders as well as consumer confidence.

The Federal Reserve released the minutes from its May meeting. In the minutes, some Fed policymakers said they favored removing the phrase that “the stance of monetary policy remains accommodative”. Not surprisingly, the minutes didn’t shed light on the Fed’s plans, saying that another rate hike would occur “soon”, on the assumption that the US economy continues to perform as expected. Still, a quarter-point rate hike in August is virtually a given, with the CME Group setting the odds of a hike at 95 percent. This would mark a second hike in 2018. After that? The Fed projection remains at three rates hikes in 2018, but some analysts are predicting four increases this year.

Earlier this week, there seemed to be some positive momentum regarding the US-China trade talks. However, President Trump has since voiced skepticism over progress in the negotiations, saying he was ‘not really’ satisfied with the results. This has been followed by reports on Wednesday that the US is investigating auto imports on national security concerns, which has raised concerns that US tariffs could shake-up the global auto sector. Trump’s comments have confused the markets, as Treasury Secretary Steven Mnuchin declared on the weekend that the trade spat was ‘on hold’. Investor risk appetite has also waned as there is uncertainty whether North Korean leader Kim Jong-un will meet with President Trump next month. On Tuesday, Trump acknowledged that there was a ‘substantial’ chance that the summit planned with Kim in Singapore on June 12 would not take place.

 

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USD/CAD Fundamentals

Thursday (May 24)

  • 4:15 US FOMC Member William Dudley Speaks
  • 8:30 Canadian Corporate Profits. Actual 2.7%
  • 8:30 US Unemployment Claims. Estimate 220K. Actual 234K
  • 9:00 US HPI. Estimate 0.5%. Actual 0.1%
  • 10:00 US Existing Home Sales. Estimate 5.56M
  • 10:30 US Natural Gas Storage. Estimate 92B
  • 10:35 US FOMC Member Rafael Bostic Speaks

Friday (May 25)

  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Durable Goods Orders. Estimate -1.3%
  • 9:20 US Fed Chair Powell Speaks
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 98.8
  • 10:00 US Revised UoM Inflation Expectations
  • 11:45 US FOMC Member Rafael Bostic Speaks

*All release times are DST

*Key events are in bold

USD/CAD for Wednesday, May 23, 2018

USD/CAD, May 24 at 9:35 DST

Open: 1.2835 High: 1.2912 Low: 1.2828 Close: 1.2912

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2687 1.2757 1.2850 1.2943 1.3015 1.3125

USD/CAD ticked higher in the Asian session and has posted stronger gains in European trade

  • 1.2850 has switched to a support role as USD/CAD has moved higher
  • 1.2943 is the next resistance line
  • Current range: 1.2850 to 1.2943

Further levels in both directions:

  • Below: 1.2850, 1.2757, 1.2687 and 1.2527
  • Above: 1.2943, 1.3015 and 1.3125

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed directions and is showing movement towards short positions. Currently, short positions have a majority (55%), indicative of trader bias towards USD/CAD reversing directions and moving lower.

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.USD/CAD