USDCAD Forecast: Canadian Dollar Edges Lower, US Durable Goods Next

The Canadian dollar continues to head lower on Friday. Currently, USD/CAD is trading at 1.2910, up 0.23% on the day. On the release front, there are no Canadian events on the schedule. In the US, the focus is on durable goods reports, with expectations of mixed results. Core durable goods orders is expected to climb to 0.5%, but the markets are braced for a decline of 1.3% from durable good orders. The US will also release UoM Consumer Sentiment, is expected to remain unchanged at 98.8 points.

Speculation has been swirling that that summit between President Trump and North Korean leader Kim Jong-un was in trouble, and there was dramatic news on Thursday that the meeting has been canceled. Trump sent a letter to Kim, saying that he could not go ahead with the meeting, scheduled for June 12 in Singapore, after particularly harsh comments by the North Korean leader. For his part, Pyongyang was restrained in its response, saying that it still looked forward to resolving outstanding issues with the US. The muted reaction was good news for the stock markets, as tensions between the US and North Korea have rattled investors in recent months. If Trump and Kim decide to re-escalate tensions, investor risk appetite could wane and hurt the Canadian dollar.

The Federal Reserve released the minutes from its May meeting. In the minutes, some Fed policymakers said they favored removing the phrase that “the stance of monetary policy remains accommodative”. Not surprisingly, the minutes didn’t shed light on the Fed’s plans, saying that another rate hike would occur “soon”, on the assumption that the US economy continues to perform as expected. Still, a quarter-point rate hike in August is virtually a given, with the CME Group setting the odds of a hike at 95 percent. This would mark a second hike in 2018. After that? The Fed projection remains at three rates hikes in 2018, but some analysts are predicting four increases this year.

Dangerous Brinkmanship

USD/CAD Fundamentals

• 8:30 US Core Durable Goods Orders. Estimate 0.5%

• 8:30 US Durable Goods Orders. Estimate -1.3%

• 9:20 US Fed Chair Powell Speaks

• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.8

• 10:00 US Revised UoM Inflation Expectations

• 11:45 US FOMC Member Rafael Bostic Speaks

Open: 1.2881 High: 1.2922 Low: 1.2876 Close: 1.2914

USD/CAD Technical

USD/CAD has ticked higher in the Asian session and has posted limited movement in the European session

• 1.2850 is providing support

• 1.2943 is the next line of resistance

• Current range: 1.2850 to 1.2943

Further levels in both directions:

• Below: 1.2850, 1.2757, 1.2687 and 1.2527

• Above: 1.2943, 1.3015 and 1.3125