USD/CAD Canadian Dollar Higher as USD Loses Fed Boost

The Canadian dollar is higher against its US counterpart on Thursday. The USD surged on Wednesday after the Fed’s September policy meeting left hawkish estimates for the path of rate hikes in the US. The US lost some of the momentum when Canadian data was released. Wholesale trade in Canada improved 1.5 percent in July adding another positive sign of a strong economy.

CAD traders will set their sights on retail sales and inflation data to be published on Friday, September 22 at 8:30 am EDT. Both indicators are expected to improve putting pressure on the US dollar. NAFTA negotiations will enter its third round on Saturday as the talks head to Ottawa. Canadian officials were on the record today saying that a deal by the end of 2017 or early 2018 was within reach. Mexico and the United States would be happy to hear as both have pushed for speedy negotiations to avoid the debate to last until the Mexican presidential elections and US primaries.

The USD/CAD fell 0.11 percent on Thursday. The pair is trading at 1.2333 and has been trading in a tight range. The USD is losing some of the momentum from the hawkish Fed economic projections on Wednesday. 11 out of 16 policymakers still forecast a rate hike in US interest rates before the end of the year. The Canadian dollar started the session losing ground to the greenback as oil prices fell only to recover as the day wore on.

Canadian inflation and retail sales data due on Friday will close the week for CAD traders. The consumer price index (CPI) is expected to rise 0.2 percent and retail sales is forecasted to have risen by 0.4 percent. Both indicators could validate the strength of the Canadian economy and signal a third rate hike before the end of the year by the Bank of Canada (BoC).

Energy gained 0.096 percent in the last 24 hours. The price of West Texas Intermediate is trading at 50.23 ahead of the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna on Friday. The group will meet with non-OPEC members to discuss the production cut agreement and sources have indicated a possible extension beyond the March 2018 could be in the works.

The Energy Information Administration (EIA) report of weekly US crude inventories on Wednesday showed a higher than expected rise at 4.6 million barrels. The glut is seen as a positive given the disruptions in American production and proof of the flexibility and speed of shale output. Shale producers and the OPEC have been engaged in both sides of a supply strategy. OPEC members tried a market share strategy that increased production to drive US shale operations out of business, but that approach backfired as oil prices tanked and has taken a coordinated effort with other major non-OPEC members.
Market events to watch this week:

Wednesday, September 20
6:45pm NZD GDP q/q
11:50pm JPY Monetary Policy Statement
Thursday, September 21
Tentative JPY BOJ Policy Rate
2:30am JPY BOJ Press Conference
8:30am USD Unemployment Claims
Friday, September 22
8:30am CAD CPI m/m
8:30am CAD Core Retail Sales m/m
8:30am All Day NZD Parliamentary Elections

*All times EDT