USD/CAD: Canadian Dollar Under Pressure, U.S. Retail Sales Disappoints

The Canadian dollar has ticked higher in the Wednesday session, after considerable losses on Tuesday. Currently, USD/CAD is trading at 1.2943, down 0.17% on the day. On the release front, there are no Canadian indicators for a third consecutive day. In the US, key indicators were a mix. Retail Sales declined 0.1%, missing the estimate of 0.3%. On the inflation front, PPI dipped to 0.2%, but still beat the estimate of 0.1%. On Thursday, Canada releases the ADP Non-Farm Employment Change. The US will publish employment claims and the Philly Fed Manufacturing Index.

On Tuesday, Bank of Canada Governor Stephen Poloz sounded dovish about future rate hikes. Poloz said that there was slack in the labor market, leaving room for the economy to grow without generating inflation. Investors took this as a message that the BoC is in no rush to raise rates anytime soon, and the Canadian dollar lost ground on Tuesday. Poloz added that any rate increases would be “gradual” and dependent on economic data. It seems clear that the BoC will not be able to match the Fed pace of rate hikes, as the US economy continues to outpace its northern neighbor. As well, the future of NAFTA is up in the air, with the US threatening to withdraw from the agreement if Canada and Mexico do not make far-reaching concessions to the US. This means that the Canadian dollar could be in trouble, as rate hikes in the US will make the greenback more attractive to investors.

The Federal Reserve is widely expected to raise interest rates next week. According to the CME Group (NASDAQ:CME), the odds of a quarter-point raise stand at 89 percent. What can we expect from the Fed during the year? The pressing question is how many rate hikes we will see in 2018. The current Fed projection remains at three hikes, but the superb nonfarm payrolls report last week has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.

USD/CAD Fundamentals

Wednesday (March 14)

  • 8:30 US Core Retail Sales. Estimate 0.4%. Actual 0.2%
  • 8:30 US PPI. Estimate 0.1%. Actual 0.2%
  • 8:30 US Retail Sales. Estimate 0.3%. Actual -0.1%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.2%
  • 10:00 US Business Inventories. Estimate 0.6%
  • 10:30 US Crude Oil Inventories. Estimate 2.2M

Thursday (March 15)

  • 8:30 Canadian ADP Non-Farm Employment Change
  • 8:30 US Empire State Manufacturing Index. Estimate 15.2
  • 8:30 US Philly Fed Manufacturing Index. Estimate 23.2
  • 8:30 US Unemployment Claims. Estimate 230K

*All release times are GMT

*Key events are in bold

USD/CAD for Wednesday, March 14, 2018


USD/CAD, March 14 at 8:50 EST

Open: 1.2965 High: 1.2966 Low: 1.2934 Close: 1.2943

USD/CAD Technical


USD/CAD ticked higher in the Asian session and has edged higher in European trade

  • 1.2920 is providing support
  • 1.3014 is the next line in resistance
  • Current range: 1.2920 to 1.3014

Further levels in both directions:

  • Below: 1.2920, 1.2865, 1.2757 and 1.2630
  • Above: 1.3014, 1.3165 and 1.3260

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little movement in the Wednesday session. Currently, short positions have a majority (62%), indicative of trader bias towards USD/CAD continuing to move lower.

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