The Canadian dollar is steady in the Friday session, after posting gains on Thursday. Currently, USD/CAD is trading at 1.3250, down 0.05% on the day. On the release front, Canada releases monthly GDP, which is expected to drop to 0.0%. On the inflation front, the Raw Materials Price Index is forecast to climb to 1.2%. In the U.S., Core PCE Price Index is expected to remain pegged at 0.2% for a fourth straight month, while Personal Spending is forecast to drop to 0.4%. We’ll also get a look at UoM Consumer Confidence, which is forecast to rise to 99.1 points.
Investors are keeping a close eye on the Bank of Canada, which holds a policy meeting on July 11. The bank has strongly hinted that a rate hike could be coming soon. On Wednesday, BoC Governor Stephen Poloz had a hawkish message for the markets, noting that inflation was on target and the domestic economy was performing well. However, Poloz also mentioned that the trade war between Canada and the U.S. was hurting business investment. Currently, the likelihood of a rate hike in July is 55 percent. Canadian economic data in the next two weeks will likely be the determining factor as to whether the BoC presses the rate trigger, or opts to wait until later in the year.
The tariff showdown between the U.S. and its major trading partners continues, and the crisis could affect U.S. monetary policy. Currently, the Federal Reserve plans to raise rates four times in 2018 (up from three), but a global trade war could force the Fed to revise its forecast down to three hikes. There is a split among Fed policy-makers with regard to the number of rate hikes in the second half of 2018. Earlier in the week, Atlanta Fed bank president Raphael Bostic said that if the trade war intensified, he would vote against a fourth rate hike, due to downside risks to the economy. Fed Chair Jerome Powell sounded pessimistic about the economic effects of trade tensions at an ECB forum earlier in June, and if other Fed members express similar concerns, the Fed could delay a fourth hike until 2019.
USD/CAD Fundamentals
Friday (June 29)
- 8:30 Canadian GDP. Estimate 0.0%
- 8:30 Canadian Raw Materials Price Index. Estimate 1.2%
- 8:30 Canadian Industrial Product Price Index. Estimate 0.9%
- 8:30 US Core PCE Price Index. Estimate 0.2%
- 8:30 US Core Personal Spending. Estimate 0.4%
- 10:00 US Revised UoM Consumer Sentiment. Estimate 99.1
- 10:00 UoM Revised UoM Inflation Expectations
*All release times are DST
*Key events are in bold
USD/CAD for Friday, June 29, 2018
USD/CAD, June 29 at 8:00 DST
Open: 1.3252 High: 1.3269 Low: 1.3210 Close: 1.3250
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2970 | 1.3067 | 1.3160 | 1.3292 | 1.3436 | 1.3550 |
USD/CAD edged lower in the Asian session but recovered in European trade
- 1.3160 is providing support
- 1.3292 is the next resistance line
- Current range: 1.3160 to 1.3292
Further levels in both directions:
- Below: 1.3160, 1.3067 and 1.2970
- Above: 1.3292, 1.3436, 1.3530 and 1.3637
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