USD/CAD is showing limited movement in the Friday session. Currently, the pair is trading just below the 1.31 line. On the release front, it’s a busy day on both sides of the border. Canada releases a host of inflation indicators, led by CPI. The markets are expected to post a modest gain of 0.3% after two straight declines. In the US, the markets are forecasting mixed news from today’s key indicators. New Home Sales is expected to jump to 575 thousand, but UoM Consumer Sentiment is forecast to dip to 96.1 points.
Canadian retail sales reports were unexpectedly soft in December, as consumers cut back in spending in December. Core Retail Sales declined 0.3%, compared to a forecast of +0.8%, while Retail Sales dropped 0.5%, missing the forecast of +0.1%. Will inflation levels point upwards despite weak consumer spending? CPI is expected to post a modest gain of 0.3%, after two consecutive declines. Traders should keep a close on the CPI release, as an unexpected reading could affect the movement of USD/CAD. The Canadian dollar posted considerable gains on Thursday, as it recovered most of its losses from earlier in the week.
The markets were somewhat disappointed with the Federal Reserve minutes, which didn’t provide any clues about the timing of another rate hike. This sentiment allowed the Canadian dollar to pick up ground against the greenback on Thursday. The most important comment in the minutes was that policymakers believe that a rate hike “fairly soon” could be appropriate in order to head off an overheated economy. Fed policymakers remain confident that the central bank will raise rates gradually, given the strong performance of the US economy. At the same time, the minutes noted uncertainty about President Trump’s fiscal stimulus plan but little concern over the risk of inflation. So, the million dollar question of when the Fed will press the rate trigger remains unanswered. Although pressure is slowly building towards a move by the Fed, there does not appear a sense of urgency to raise rates at the next meeting in March. According to the CME Group (NASDAQ:CME), the odds of a March hike are only at 17%, while the likelihood of a hike in either May or June stands above 40%.
USD/CAD Fundamentals
Friday (February 24)
- 8:30 Canadian CPI. Estimate 0.3%
- 8:30 Canadian Common CPI
- 8:30 Canadian Median CPI
- 8:30 Canadian Trimmed CPI
- 8:30 Canadian Core CPI
- 10:00 US New Home Sales. Estimate 575K
- 10:00 US Revised UoM Consumer Sentiment. Estimate 96.1
*All release times are GMT
*Key events are in bold
USD/CAD for Friday, February 24, 2017
USD/CAD February 24 at 5:30 EST
Open: 1.3102 High: 1.3117 Low: 1.3076 Close: 1.3092
USD/CAD Technicals
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.2815 | 1.2992 | 1.3003 | 1.3120 | 1.3253 | 1.3371 |
- USD/CAD edged lower in the Asian session and is steady in European trade
- 1.3003 is providing support
- 1.3120 remains a weak resistance line
Further levels in both directions:
- Below: 1.3003, 1.2922 and 1.2815
- Above: 1.3120, 1.3253, 1.3371 and 1.3461
- Current range: 1.3003 to 1.3120
OANDA’s Open Positions Ratio
USD/CAD ratio is pointing to gains in long positions. Currently, long positions have a majority (58%), indicative of trader bias towards USD/CAD reversing directions and moving upwards.