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The Canadian dollar posted mild gains against its American counterpart on Monday as the loonie climbed above 76 cents for the first time in a week. While the loonie will try to find direction from the US dollar, investors will also concentrate on several key economic events this week.
The CAD/USD currency pair rose 0.16% from an opening of 0.7599 to 0.7611 at 20:30 GMT. The USD/CAD currency pair tumbled 0.11% from an opening of 1.3158 to 1.3143.
On Friday, the Canadian consumer price index (CPI) and retail sales data reports will be released. Early forecasts suggest that retail sales will be flat in June and the CPI will jump 2.5%. Both policymakers and traders are expected to comb through the figures as the Bank of Canada (BOC) confirmed last week that future increases to interest rates are data-dependent.
Should these reports beat market anticipations, then it could lift the Canadian dollar and increase the chances of the central bank pulling the trigger on a September rate hike.
Analysts are not expecting to find currency support from the North American Free Trade Agreement (NAFTA). In addition to the recent Mexican election results, US trade negotiators do not appear to be in any hurry to agree to a new deal, especially as administration officials engage in trade spats with China. The level of uncertainty surrounding NAFTA talks has BOC Governor Stephen Poloz sounding the alarm, warning that the loonie was “a little bit soft” last month based on “investment sentiment and sentiment around trade.”
Meanwhile, Ottawa and Washington are engaged in a tit-for-tat trade war. Earlier this month, the Canadian government imposed its retaliatory tariffs on $16.6 billion worth of US goods, leaving the White House threatening to retaliate to the retaliation. Prime Minister Justin Trudeau and his Cabinet have confirmed that they will respond to any import levy with their own series of taxes.
Since the Canadian dollar has not made gains from higher oil prices, the loonie will attempt to establish a short-term trading pattern based on the greenback.
President Donald Trump met with Russian President Vladimir Putin on Monday. The leaders vowed to improve US-Russia relations and try to find middle ground in a wide array of disputes, from Ukraine to NATO. To celebrate the three-nation 2026 FIFA World Cup, President Putin gave Trump a World Cup soccer ball, telling him that “now the ball is in your court.”
Federal Reserve Chair Jerome Powell will deliver his semi-annual testimony on Capitol Hill this week. Observers will wait to see if Powell offers any hints as to how serious the central bank is about raising rates two more times in 2018. So far, Powell and other members of the Federal Open Market Committee (FOMC) have expressed optimism about the national economy and its outlook, leading many to believe more rate hikes are coming.
Also, the US government published positive economic data on Monday. US business inventories advanced 0.4% in May, while retail sales surged 1.4%, finding the biggest gains in the auto sector (0.8%), service stations (1%), and ecommerce (1.3%).
The US dollar still slipped to kick off the trading week, sliding 0.26% to 94.49.
If you have any questions, comments or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.
© AndrewMoran for Forex News, 2018. |
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Post tags: Bank of Canada, CAD/USD, canadian dollar, Donald Trump, Justin Trudeau, north american free trade agreement (nafta), us dollar, US Retail Sales, USD/CAD, Vladimir Putin
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Canadian Dollar Climbs Higher As Investors Focus on Data published first on medium.com/@forexlasersforum
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