The Canadian dollar continues to head lower and has posted considerable losses in the Thursday session. Currently, USD/CAD is trading at 1.2895, up 0.47% on the day. On the release front, Canadian Corporate Profits rebounded in the first quarter with a strong gain of 2.7%. In the US, unemployment claims jumped to 234 thousand, its highest level in seven weeks. Later in the day, the US releases Existing Home Sales, which is expected to drop to 5.56 million. On Friday, the US will publish durable goods orders as well as consumer confidence.
The Federal Reserve released the minutes from its May meeting. In the minutes, some Fed policymakers said they favored removing the phrase that “the stance of monetary policy remains accommodative”. Not surprisingly, the minutes didn’t shed light on the Fed’s plans, saying that another rate hike would occur “soon”, on the assumption that the US economy continues to perform as expected. Still, a quarter-point rate hike in August is virtually a given, with the CME Group setting the odds of a hike at 95 percent. This would mark a second hike in 2018. After that? The Fed projection remains at three rates hikes in 2018, but some analysts are predicting four increases this year.
Earlier this week, there seemed to be some positive momentum regarding the US-China trade talks. However, President Trump has since voiced skepticism over progress in the negotiations, saying he was ‘not really’ satisfied with the results. This has been followed by reports on Wednesday that the US is investigating auto imports on national security concerns, which has raised concerns that US tariffs could shake-up the global auto sector. Trump’s comments have confused the markets, as Treasury Secretary Steven Mnuchin declared on the weekend that the trade spat was ‘on hold’. Investor risk appetite has also waned as there is uncertainty whether North Korean leader Kim Jong-un will meet with President Trump next month. On Tuesday, Trump acknowledged that there was a ‘substantial’ chance that the summit planned with Kim in Singapore on June 12 would not take place.