USD/CAD Forecast: Canadian dollar edges higher ahead of budget release

Kenny Fisher MarketPulse

The Canadian dollar has posted slight gains in the Tuesday session. Currently, USD/CAD is trading at 1.3310, down 0.20% on the day. On the release front, Canada releases its annual budget, which should be treated as a market-mover.

All eyes are will be on the Federal Reserve, which holds a policy meeting on Wednesday. The Fed is widely expected to maintain the benchmark rate at a range between 2.25 – 2.50 percent. Investors will be expecting the Fed to play a dovish tune in the March rate statement. The Fed’s balance sheet will also be under scrutiny, with the policymakers expected to announce when they will stop reducing the $4 billion balance sheet. The Fed has been reducing assets by $50 billion a month, but there has been criticism that this tightening is choking economic growth. The Fed will also publish its new dot plot, which is used to convey its interest rate outlook.

Is the Canadian economy heading into a recession? Despite some strong employment numbers, there are worrying signs. The economy recorded a weak 0.4% gain in Q4 on an annualized basis and has been listless early in 2019. David Wolf, a former senior official at BoC, has projected that the Canadian dollar could sink to its record low of 1.60 (62 cents U.S.). Weak oil prices and the global trade war have hurt the Canadian economy and dampened the critical export sector, and the Canadian dollar, which is down 1.40% in March, could face further headwinds.

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USD/CAD Fundamentals

Tuesday (March 19)

8:30 Canadian Annual Budget Release
10:00 US Factory Orders. Estimate 0.3%

Wednesday (March 20)

14:00 US FOMC Economic Projections
14:00 US FOMC Statement
14:00 US Federal Funds Rate. Estimate <2.50%
14:00 US FOMC Press Conference

Open: 1.3335 High: 1.3345 Low: 1.3304 Close: 1.3310

USD/CAD Technical

S3	S2	S1	R1	R2	R3
1.3125	1.3200	1.3290	1.3383	1.3445	1.3552

USD/CAD showed little movement in the Asian session and has posted losses in European trade.

1.3290 is under pressure in support
1.3383 is the next resistance line
Current range: 1.3290 to 1.3383

Further levels in both directions:

Below: 1.3290, 1.3200 and 1.3125
Above: 1.3383, 1.3445, 1.3552 and 1.3662

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

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