USD / CAD showed little movement Friday as the pair trades at 1.3230 in the European session. Canadian markets are closed for Good Friday, so there are no Canadian release on the calendar. The US release final GDP for the fourth quarter, markets expected a gain of 1.0%.
Canada is a major oil producer, so the Canadian dollar is sensitive to oil prices. The fall in oil prices since mid-2015 resulted in Canadian currency slide down. This trend was apparent again Wednesday as oil prices fell following an inventory report Energy Information Administration of a huge surplus of US gross - reading of 9.4 million barrels was more than triple forecasts 2.5 million. Market participants predict that the surplus will last at least two years, and Phillip Futures analyst Daniel Ang in Wednesday noted that the current uptrend is unsustainable because of oversupply. The Canadian dollar has responded by losing 0 points to its US counterpart on Wednesday.
US durable reports in February highlighted a manufacturing sector that continues to struggle. Durable goods orders were down 1.0%, well below the forecast of a 0.2% decline. This marked the third decline in the indicator in four months. Orders for durable goods was even worse, with a -2.8% reading, slightly above the estimate of -3.0%. This slowdown reflects weak global demand, which had a strong negative impact on the manufacturing sectors of developed economies around the world, including the United States.
Federal Reserve last week's policy statement seem to rule out imminent rise in rates, but since then, many Fed members have publicly expressed their support for a rate hike as soon as April. Monday, John Williams, president of the San Francisco Fed, said the Fed could raise rates in April and June, if economic conditions improve. Although the plot dot (a projection FOMC rate increases) was lowered to the March meeting, he insisted that the Fed did not change its trajectory of rising interest rates. His comments were echoed by Atlanta Fed Dennis Lockhart, who also said that a rate move in April was a clear possibility. There was further support for rate hikes of two other Fed presidents, Patrick Harker and James Bullard. Harker said that given the strength of the economy, the Fed should consider raising interest rates at the April meeting, adding that he supported at least three rate hikes during the year. Wednesday, Bullard said the US unemployment rate to very low levels, the Fed may be forced to raise rates sooner than later. Given these statements, traders should treat a motion in April by the Fed as a reasonable possibility, with US employment and inflation figures have a huge say in the decision of the Fed.
USD / CAD for Friday, March 25, 2016
USD / 25 CAD March at 5:55 DST
Open 1.3231 Low 1.3213 top 1.3261 Close 1.3234
USD / CAD Fundamentals
Friday (March 25)
- 12:30 US final GDP. Estimated 1.0%
- 12:30 Price Index US final GDP. Estimated 0.9%
* All times DST
For a full list of events planned in the foreign exchange market check the economic calendar MarketPulse
Open ratio positions OANDA
USD / CAD ratio shows an equal division between long and short positions, indicative of a lack of bias to trade in the direction in which the pair then take.
This article is for general information purposes. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or its subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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