USDCAD Forecast: Canadian dollar edges higher, U.S consumer confidence next

The Canadian dollar has edged higher in the Friday session, following the trend seen on Thursday. Currently, USD/CAD is trading at 1.3011, down 0.18% on the day. On the release front, there are no Canadian events on the schedule. In the U.S, today’s key indicator is UoM Consumer Sentiment, which is expected to remain above the 100-level, with an estimate of 100.4 points.

U.S. consumer inflation reports missed their estimates, and the euro took advantage, posting gains on Thursday. CPI and Core CPI both posted small gains of 0.1%, shy of the estimate of 0.2%. On a year-to-year basis, CPI increased 2.3% in September, down from 2.7% in August. Still, with inflation above the Fed’s 2% inflation target, these readings are unlikely to affect the Fed’s plans to raise interest rates in December, which would mark the fourth rate increase this year. The likelihood of a rate hike remains high, with the CME pegging the odds at 76%.

With the U.S economy continuing to post strong numbers, the Federal Reserve is on track to raise rates in December. This would be the fourth rate hike in 2018, and the markets are expecting three more hikes in 2019. Not surprisingly, this has put pressure on the Bank of Canada to raise rates as well. The Canadian economy is in good shape, but not nearly as strong as its southern neighbor. The Bank of Canada holds its next policy meeting on October 24, and the strength of key Canadian releases will be a major factor as to whether policymakers raise rates.

USD/CAD Fundamentals

• 8:30 US Import Prices. Estimate 0.3%

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 100.4

• 10:00 US Preliminary UoM Inflation Expectations

• Day 1 – IMF Meetings

• 12:30 US FOMC Member Raphael Bostic Speaks

• 12th-18th US Federal Budget Balance. Estimate 71.0B

• 22:30 US FOMC Member Randal Quarles Speaks

Open: 1.3034 High: 1.3041 Low: 1.3002 Close: 1.3011

USD/CAD Technical

USD/CAD has posted small losses in the Asian and European sessions

• 1.2970 is providing support

• 1.3067 is the next resistance line

• Current range: 1.2970 to 1.3067

Further levels in both directions:

• Below: 1.2970, 1.2831, 1.2733 and 1.2649

• Above: 1.3067, 1.3198 and 1.3292