The Canadian dollar is steady in the Friday session. Currently, the pair is trading at 1.3219, down 0.11% on the day. On the release front, the markets are braced for weak Canadian retail sales reports for December. Core retail sales are expected in at -0.5%, while retail sales is forecast to post a flat 0.0% reading.
In the U.S., there are no data releases, but we’ll hear from a host of FOMC members, with the markets hoping for some insights into future monetary policy.
Risk appetite remains strong, as investors are optimistic that trade talks between the U.S and China will yield a deal. Negotiations continued this week in Washington, but details have been hard to come by. The talks are reportedly making progress, as negotiators are preparing memorandums of understanding on key issues such as cyber theft and intellectual property rights.
Investors are hopeful that a March 1 deadline of higher U.S tariffs can be avoided. The trade war between the two countries has weighed heavily on global growth, and the Canadian dollar could jump if there is a breakthrough in the talks.
The Federal Reserve minutes from the January meeting indicated that policymakers remain dovish with regard to monetary policy. Investors were not surprised, and gold was unable to make any headway.
Participants reiterated that the Fed will remain cautious, stating that a “patient approach to monetary policy” was appropriate. However, members added that if economic projections improved, the Fed could revise the “patient approach”.
The minutes noted that the employment market had strengthened and economic activity was rising, but expected GDP in 2019 to slow down compared to 2018. We may not see a rate hike before the second half of the year, as the Fed has scaled back its forecast to two hikes this year, while the markets have priced in no rates hikes until 2020.
Markets flat on final day of the week
U.S dollar stronger by default, but for how long?
USD/CAD Fundamentals
Friday (February 22)
- 8:30 Canadian Core Retail Sales. Estimate -0.5%
- 8:30 Canadian Retail Sales. Estimate 0.0%
- 10:15 US FOMC Member Williams (NYSE:WMB) Speaks
- Tentative – Fed Monetary Policy Report
- 12:00 US FOMC Member Clarida Speaks
- 13:30 US FOMC Member Bullard Speaks
- 13:30 US FOMC Member Quarles Speaks
- 17:30 US FOMC Member Williams Speaks
*All release times are EST
*Key events are in bold
USD/CAD for Friday, February 22, 2019
USD/CAD, February 22 at 8:30 EST
Open: 1.3233 High: 1.3242 Low: 1.3204 Close: 1.3219
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.3049 | 1.3125 | 1.3200 | 1.3290 | 1.3383 | 1.3445 |
USD/CAD posted small gains in the Asian session. but has reversed directions in European trade
- 1.3200 is a weak support line
- 1.3290 is the next resistance line
- Current range: 1.3200 to 1.3290
Further levels in both directions:
- Below: 1.3200, 1.3125, 1.3049 and 1.2969
- Above: 1.3290, 1.3383 and 1.3445