The USD/CAD traded lower on Wednesday as traders reacted to higher crude oil prices and after the Bank of Canada held its interest rate target unchanged
The USD/CAD traded lower on Wednesday as traders reacted to higher crude oil prices and after the Bank of Canada held its interest rate target unchanged and said economic growth would rebound next quarter. The Forex pair was trading at 1.3113, down 0.0008 or -0.06%.
The Bank of Canada kept its benchmark interest rate at 0.5 percent, matching forecasts. Policy makers lowered their expectations for growth in the three months through June due to wildfires that have raged in Alberta, but said growth will return as oil production resumes.
Crude oil prices nearly reached the psychological $50 level on Wednesday, boosted by unexpectedly large inventories drawdowns as reported by the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday.
After trading near a seven-week low, the Canadian Dollar was probably ripe for a rally due to technically oversold conditions. However, with the possibility of a Fed rate hike in June, gains are likely to be short-lived and limited. In my opinion, the sell-off in the USD/CAD was largely due to a knee-jerk reaction by investors to a central bank statement that was perhaps not as dovish as the market had expected.
The USD/CAD is likely to resume its rally once traders are thoroughly convinced the Fed will raise rates in June and once crude oil starts to weaken in reaction to the global supply glut.
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Today’s economic releases:
Cur. | Event | Actual | Forecast | Previous |
USD | API Weekly Crude Oil Stock | -5.137M | -3.300M | -1.140M |
USD | API Weekly Cushing Crude Oil Stock | -0.189M | -0.950M | 0.508M |
NZD | Trade Balance (MoM) (Apr) | 292M | 60M | 117M |
NZD | Trade Balance (YoY) (Apr) | -3,660M | -3,940M | -3,380M |
AUD | Construction Work Done (QoQ) (Q1) | -2.6% | -1.5% | -3.6% |
EUR | GfK German Consumer Climate (Jun) | 9.8 | 9.7 | 9.7 |
EUR | German Business Expectations (May) | 101.6 | 100.8 | 100.4 |
EUR | German Current Assessment (May) | 114.2 | 113.2 | 113.2 |
EUR | German Ifo Business Climate Index (May) | 107.7 | 106.8 | 106.6 |
EUR | EU Finance Ministers Meeting | |||
USD | Goods Trade Balance (Apr) | -57.53B | -60.10B | -56.90B |
USD | FOMC Member Harker Speaks | |||
USD | Services PMI (May) | 51.2 | 53.1 | 52.8 |
CAD | Interest Rate Decision | 0.50% | 0.50% | |
USD | Crude Oil Inventories | -4.226M | -2.450M | 1.310M |
USD | Cushing Crude Oil Inventories | -0.649M | 0.461M | |
USD | FOMC Member Kashkari Speaks | |||
USD | FOMC Member Kaplan Speaks | |||
AUD | Private New Capital Expenditure (QoQ) (Q1) | -3.0% | 0.8% |
Upcoming Economic Events that you should be monitoring:
Thursday, May 26, 2016
Cur. | Event | Actual | Forecast | Previous |
GBP | BBA Mortgage Approvals | 44.8K | 45.1K | |
GBP | Business Investment (QoQ) (Q1) | 0.1% | -2.0% | |
GBP | GDP (YoY) (Q1) | 2.1% | 2.1% | |
GBP | GDP (QoQ) (Q1) | 0.4% | 0.4% | |
USD | FOMC Member Bullard Speaks | |||
USD | Core Durable Goods Orders (MoM) (Apr) | 0.3% | -0.2% | |
USD | Durable Goods Orders (MoM) (Apr) | 0.5% | 1.3% | |
USD | Initial Jobless Claims | 275K | 278K | |
AUD | RBA Assist Gov Debelle Speaks | |||
USD | Pending Home Sales (MoM) (Apr) | 0.6% | 1.4% | |
USD | FOMC Member Powell Speaks | |||
AUD | RBA Assist Gov Debelle Speaks | |||
JPY | National Core CPI (YoY) (Apr) | -0.4% | -0.3% | |
JPY | Tokyo Core CPI (YoY) (May) | -0.4% | -0.3% |
Government Bond Auctions
May 25 11:03 Sweden Sek 1bn 3.5% 2022 & Sek 3bn 1% 2026 bonds
May 25 11:05 Norway Holds bond auction
May 25 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund
May 25 19:00 US Holds 5Yr Notes Auction, 2Yr FRN
May 26 11:10 Italy Announces details of bond auction
May 26 11:10 Italy Holds Zero-coupon/BTPei auction
May 26 17:20 Sweden Details of I/L auction on Jun 02
May 26 19:00 US Holds 7Yr Notes Auction
May 30 11:10 Italy Holds bond auction
Jun 01 10:30 Denmark Holds bond auction
Jun 01 11:30 Germany Eur 4bn Apr 2021 Bobl
Jun 01 11:30 UK 1.5% 2021 Gilt
Jun 01 17:20 Sweden Announces details of bond auction on Jun 08
Jun 02 10:30 Spain Holds bond auction
Jun 02 11:03 Sweden Holds I/L bond auction
Jun 02 11:50 France Holds bond auction
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.