The Canadian dollar is trading sideways in the Tuesday session. Currently, USD/CAD is trading at 1.2961, up 0.05% on the day. On the release front, there are no Canadian releases. In the U.S, today’s key indicator is CB Consumer Confidence, which is expected to climb to 132.2 points. On Wednesday, the spotlight will be on the Federal Reserve, which is likely to maintain interest rates at a range between 2.00% and 2.25%.
It was another strong week for the Canadian dollar, which posted gains close to 0.1 percent. USD/CAD dropped to 1.2885 on Thursday, its lowest level since mid-June. The Canadian currency held its own on Friday, despite mixed consumer data. CPI dipped from 3.0% to 2.8% in August, a rare decline. Even with the rare decline, inflation remains well above the BoC target of 2.0%. Retail Sales rebounded with a strong gain of 0.9%, above the estimate of 0.6%. The strong consumer numbers have strengthened the likelihood of a rate hike when the BoC meets next in October.
Trade tensions have escalated this week, with the U.S and China slapping tariffs on each other. On Monday, the U.S imposed tariffs on some $200 billion worth of Chinese goods, while China responded with tariffs of $60 billion on U.S products. There may be more headwinds ahead, as China sharply attacked the U.S, saying it had plunged “a knife to China’s neck” with the new tariffs. The Chinese have canceled trade talks with the Trump administration, and no new talks are likely to be held until the mood improves between the world’s two largest economies. Previous rounds of tariffs between the two economic giants have boosted the U.S dollar, but so far, investors have reacted calmly and have not snapped up the U.S dollar at the expense of other currencies.