The Canadian dollar continues to gain ground in the Thursday session, after posting sharp gains on Wednesday. In the North American session, USD/CAD is trading at 1.2845, down 0.24% on the day. On the release front, Canada’s GDP in March dropped to 0.3%, edging above the estimate of 0.2%. In the U.S., Personal Spending and PCE Price Index both beat their estimates. Unemployment claims dropped sharply to 221,000, beating the estimate of 228,000. On Friday, the focus will be on employment data, with the release of nonfarm payrolls and wage growth.
It’s been an impressive turnaround for the Canadian dollar in mid-week, as the currency jumped 1.1% on Wednesday. The currency climbed on a positive view of the economy from the Bank of Canada. The bank statement noted that inflation was higher than expected and the export sector remained robust. As expected, the bank maintained the benchmark rate at 1.25 percent. Inflation has moved closer to the BoC target of 2 percent and economic growth has been steady, so the BoC will be giving serious consideration to a rate hike this summer. Some analysts are even predicting that the bank will raise rates twice in the second half of 2018.
The markets continue to keep a close eye on the “on-again off-again” summit between the U.S. and North Korean leaders. U.S. President Donald Trump and North Korean leader Kim Jong-un are scheduled to meet in Singapore on June 12, but curiously, neither side will confirm whether the meeting is on. The White House has strongly hinted that the summit will take place, saying that the U.S. continues to “actively prepare for President Trump’s expected summit with leader Kim in Singapore.” There is a flurry of activity around the summit – Trump has sent a team to Singapore and a senior North Korean official will meet with senior U.S. officials on Wednesday. If Trump tweets out that the summit is on, investor sentiment could soar and boost the Canadian dollar.
USD/CAD Fundamentals
Thursday (May 31)
- 7:30 US Challenger Job Cuts. Actual -4.8%
- 8:30 Canadian GDP. Estimate 0.2%. Actual 0.3%
- 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.2%
- 8:30 US Personal Spending. Estimate 0.4%. Actual 0.6%
- 8:30 US Unemployment Claims. Estimate 228K. Actual 221K
- 8:30 US Personal Income. Estimate 0.3%. Actual 0.3%
- 9:45 US Chicago PMI. Estimate 58.2
- 10:00 US Pending Home Sales. Estimate 0.4%
- 10:30 US Natural Gas Storage. Estimate 100B
- 11:00 US Crude Oil Inventories. Estimate -0.4M
- 12:45 US FOMC Member Rafael Bostic Speaks
- 13:00 US FOMC Member Lael Brainard Speaks
Friday (June 1)
- 8:30 US Average Hourly Earnings. Estimate 0.2%
- 8:30 US Nonfarm Employment Change. Estimate 189K
- 8:30 US Unemployment Rate. Estimate 3.9%
- 10:00 US ISM Manufacturing PMI. Estimate 58.2
*All release times are DST
*Key events are in bold
USD/CAD for Thursday, May 31, 2018
USD/CAD, May 31 at 8:40 DST
Open: 1.2876 High: 1.2895 Low: 1.2818 Close: 1.2840
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2544 | 1.2614 | 1.2757 | 1.2850 | 1.2943 | 1.3015 |
The Canadian dollar continues to break through support levels. USD/CAD ticked higher in the Asian session. The pair has posted losses in the European session
- 1.2757 is providing support
- 1.2850 is under pressure in resistance
- Current range: 1.2757 to 1.2850
Further levels in both directions:
- Below: 1.2850 and 1.2757, 1.2614 and 1.2544
- Above: 1.2850, 1.2943, 1.3015 and 1.3125
OANDA’s Open Positions Ratio
USD/CAD ratio continues to show movement towards long positions, consistent with the losses that USD/CAD has recorded on Wednesday. Currently, short positions have a majority (56%), indicative of trader bias towards USD/CAD continuing to move downwards.
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