Canadian Dollar

The Bank of Canada will deliver its interest rate “decision” and monetary policy statement in tomorrow morning’s US session. According to futures markets, traders are not expecting any changes to monetary policy tomorrow and only a 16% chance of a rate hike by the BOC’s July meeting.

Despite US stock and bond markets closed in honor of President George H. W. Bush’s passing, we’ve seen a surprising amount of volatility in the FX market.

The number of the day (and indeed the last two weeks) is 10. As in, the price of a barrel of WTI crude oil is declining for the 10th straight day, the longest streak since 1984.

At FOREX.com, we try to avoid writing about the same currency pair two trading days in a row, but occasionally big new developments make it impossible to avoid.

What a difference a week makes!

With UK traders out on holiday and markets generally slow as traders try to soak up the last of the summer sun, today’s trade has been all about…well, trade.

Well, it’s official: The Trump administration has slapped a 25% tariff on 818 Chinese goods, with a total value of up to $50B.

Market action in the past week has been driven to a large extent by heightened concerns over US-China trade negotiations, an extended rise in crude oil prices, and surging bond yields that indicate persistently increasing interest rate expectations.

After a moderate pullback last week on soft US inflation readings, the US dollar has rebounded strongly this week to resume and extend its rising trend that has been in place for the past month.

USD/CAD fell sharply for a second day in a row on Thursday as a combination of factors helped to weigh on the US dollar while boosting the Canadian dollar. This USD/CAD drop has occurred immediately ahead of key Canadian jobs data for April to be released on Friday.

The US dollar took a hit to begin the week on Monday after US President Trump issued a tweet that decried rising US interest rates amid his assessment that Russia and China are actively devaluing their respective currencies.

USD/CAD has continued to slide for much of the past three weeks as the US dollar has remained under sustained pressure while the Canadian dollar has benefited from, among other factors, provisional exemption from US President Trump’s imposition of import tariffs.

While markets at the start of this shortened trading week continue to be preoccupied by political concerns and the threat of a potential global trade war, most notably between the world’s two largest economies of the US and China, this week’s key GDP releases are also poised to move the USD/CAD currency pair.

Just as it appears that nervous markets have been put at ease by last Friday’s weaker-than-expected wage growth figures, key inflation numbers to be released this week are potentially set to create more uncertainty for investors.

USD/CAD pulled back sharply from the key 1.3000 psychological level on Tuesday, ahead of Wednesday’s interest rate decision from the Bank of Canada and Friday’s employment reports from both the US and Canada.

Two primary catalysts for the return of sharply elevated market volatility emanated from the U.S. – Fed Chair Jerome Powell’s hawkish testimony in front of the US Congress, and US President Trump’s announcement regarding sizeable import tariffs on steel and aluminum.

As the US dollar remained elevated on Tuesday in the aftermath of Federal Reserve Chair Jerome Powell’s hawkish statements in front the US House Financial Services Committee, USD/CAD broke out to a new 2-month high, tentatively confirming a continuation of the uptrend that has been in place since early February.

While the Bank of Canada has moved ahead of the European Central Bank in raising interest rates first, this hasn’t stopped the EUR/CAD from rising...

Crude oil prices fell sharply after the publication of the latest oil inventories from the EIA earlier today. The report showed big builds for stocks of gasoline and distillates, but what surprised the most was the large spike in oil production to 10.25 million barrels per day which was significantly higher than 9.92 million from the previous week.

The week ahead will likely feature heightened volatility for currency markets, depending in part on developments in US government efforts to avert a shutdown, as well as two major central bank decisions.

Despite continued weakness in the US dollar on Thursday, USD/CAD was stuck in a relatively tight range due to hesitancy and uncertainty regarding the Canadian dollar after the Bank of Canada’s rate hike and statement on Wednesday.

The recent pronounced weakness for the US dollar has helped lead to a resumed fall for USD/CAD down to a key support area around 1.2400.