The Canadian dollar is unchanged in the Wednesday session. Currently, USD/CAD is trading at 1.2775, down 0.02% on the day. On the release front, Canada releases an important inflation indicator, the Raw Materials Price Index. This indicator is expected to post a strong gain of 1.8%. In the US, Preliminary GDP is expected to rise 2.5%, and Pending Home Sales is forecast to climb 2.4%. On Thursday, the US will publish unemployment claims, personal spending and manufacturing PMI. As well, Fed chair Jerome Powell testifies before the Senate Banking Committee. Canada will publish Current Account.
The US dollar showed broad gains after Federal Reserve Chair Jerome Powell’s testimony before a congressional committee on Tuesday. Powell was cautious, saying that the Fed planned to continue its current policy of gradual rate increases, despite the stimulus of government spending and recent tax reform. Powell sounded optimistic about economic conditions, noting that the US economy was benefiting from the global recovery as well as changes in fiscal policy. Importantly, Powell did not address the question of an acceleration of rate hikes. Currently, the Fed has projected three rate hikes in 2018, with increases widely expected at the March and May meetings. However, with inflation moving higher and the economy continuing to perform well, many analysts expect the Fed to raise rates four or more times this year. Any hints at an increased pace of rate hikes could send the US dollar broadly higher.
