The Canadian dollar continues to have a quiet week. In Tuesday’s North American session, USD/CAD is trading at 1.3319, up 0.19% on the day. On the release front, there are no Canadian events until Thursday, so U.S indicators will have an added impact on the movement of USD/CAD. In the U.S, the key event is CB Consumer Confidence, which is expected to drop to 127.6 points. On Wednesday, the U.S releases durable goods reports.
The Bank of Canada has dropped hints that it is ready to raise rates in the second half of 2018, but policymakers have concerns both internally and on the global stage. The escalating trade war between the U.S and China could have serious repercussions for the Canadian economy. President Trump hasn’t spared Canada from tariffs, and with 80% of Canadian exports headed to the U.S, Canada can ill-afford a trade spat with its giant southern neighbor. On the domestic front, Canadian consumer inflation and spending data was softer than expected. Retail Sales was dismal, with a sharp drop of 1.2 percent. Despite these soft numbers, the BoC remains confident about the economy, and a July rate hike remains a reasonable possibility. Inflation is still above the target of 2.0%, and in its May policy statement the BoC removed its reference to “cautious”, replacing it with “gradual” describing its approach to rate adjustments. The markets viewed this as a signal that the bank is preparing to press the rate trigger. A rate hike would likely boost the Canadian dollar, as it makes the currency more attractive to investors.
Postoji široka zabrinutost među središnjim bankarima da bi nedavni protekcionistički potezi mogli ometati globalni rast i financijsku stabilnost. To je bila poruka u nedjelju od Banke za međunarodna poravnanja (BIS), koja djeluje kao krovna skupina za neke središnje banke 60. BIS je također upozorio da eskalirajući trgovinski rat može imati negativne nuspojave na tržištima valuta. Istodobno, BIS je izrazio potporu za povlačenje kamatnih stopa Federalne banke postupno, a za ECB se kreće prema normalizaciji, budući da oslobađa masivni program imovine.
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