We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
More View more
Real Time News
  • Knowing how to accurately value a #stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/2mjzvYvgSn
  • Previewing the Texas Rangers new home! https://t.co/WITZGSQPlc
  • Thanks for having me on @MartinSEssex https://t.co/fg8uOe16wr
  • The MACD is often used with its default setting when entering trades. However, this versatile indicator can be customized to assist traders in exiting trades too. Learn how to better incorporate the MACD into your trading strategy here: https://t.co/HnY7gzsI2q https://t.co/5F1DSvAXyy
  • What are some factors affecting $GBP as we head into 2020, quarter one? Download your Sterling fundamental forecast with @nickcawley1 here to find out: https://t.co/YfDSYSATK9 https://t.co/ANFLIuDY4J
  • Trading Global Markets new #podcast features @DailyFX Anlayst @PeterHanksFX , who discusses what assets would benefit in the next #recession. Tune into this new podcast episode hosted by @MartinSEssex here: https://t.co/Twr44cZ1GB https://t.co/llKzvZGDpQ
  • The #Euro remains weak against a range of currencies and any move higher is struggling to gain traction as the single currency continues to be sold-off. Get your #EUR technical analysis from @nickcawley1 here: https://t.co/9B2m0kmd4d https://t.co/ZENxpC59mP
  • The Indian Rupee 2020 outlook is bearish as India faces stagflation risk amid rising onion and crude oil prices. $USDINR may rise in the medium-term as the RBI defers hiking rates. Get your market update from @ddubrovskyFX here: https://t.co/lRrlZjAQDw https://t.co/mFv1EOYMjG
  • The $GBP may be on the cusp resuming a 12-year downtrend against the US Dollar as signs of topping emerge at pivotal chart resistance. Get oyur market update from @IlyaSpivak here:https://t.co/9rM3OjWmBA https://t.co/sUWcSFruHw
  • The $NZD may be on average at risk to further losses against its major counterparts such as the US Dollar and Japanese Yen. Where to for NZD/USD and NZD/JPY from here? Find out from @ddubrovskyFX here:https://t.co/OFjePKYdCb https://t.co/eo1c6QAVd8
USDCAD Bulls Look to Revisit 2018 Highs on Hawkish Fed

USDCAD Bulls Look to Revisit 2018 Highs on Hawkish Fed

2018-06-13 11:09:00
Justin McQueen, Analyst

CAD Analysis and Talking Points

  • Hawkish Fed Could See USDCAD at 2018 Highs
  • Widening US-Canadian Bond Spreads Calls for Softer CAD

See our Q2 CAD forecast to learn what will drive the currency through the quarter.

Is 4 the Magic Number?

Today will see the release of the FOMC meeting where it is near enough fully priced in that the central bank will hike the Federal Fund Rate by 25bps to 1.75-2%. However, the focus among investors is the accompanying statement and more specifically the Fed Reserve Dot Plot projection. As it stands, the median view among the FOMC is for 3 2018 rates at 2.125%, a shift by one more member for 4 rate hikes would see the median projection at 2.375%. As such, this will likely push the USD higher amid a repricing for 4 2018 rate hikes, which currently stands at 45% according to money markets.

USDCAD Bulls Look to Revisit 2018 Highs on Hawkish Fed

Source: CME

Widening US-Canadian Bond Spreads to Pressure CAD

A hawkish Fed in which the dot plot is moved to 4 2018 rate hike will likely lead to the most volatility in short term rates, whereby US 2yr yields may continue to press higher. This in turn will likely see a continued widening between US-Canadian 2yr bond spreads, which recently surpassed -60bps to lows -65bps. Additionally, greater focus has been placed on interest rate differentials amid the uncertainty from NAFTA, alongside the trade spat between the US and Canada over steel and aluminium tariff leading to receding BoC rate hike expectations (66% priced in for July rate hike vs. Prev. 75%). Subsequently, the continued widening of US-Canadian bond spreads could see USDCAD push higher.

USDCAD Bulls Look to Revisit 2018 Highs on Hawkish Fed

Source: Thomson Reuters

OPEC Set to Hike Oil Production

Commodities currencies have remained subdued in the lead up to the bi-annual OPEC meeting on June 22nd, where there are growing expectations that the cartel will ease current supply curbs. In turn, this has put a lid on further gains in oil prices, consequently keeping the pressure on CAD. Given the continued boost of US oil production, an easing of OPEC and Non-OPEC supply curbs would likely see risks to oil prices tilted to the downside.


USDCAD Bulls Look to Revisit 2018 Highs on Hawkish Fed

Chart by IG

USDCAD has made a break above the descending trendline from the 2016-17 peaks. However, a firm break above 1.3067 (June 5th high) is needed to confirm a retest of the 2018 highs at 1.3124.

Given that markets are pricing in for a hawkish FOMC the scope for disappointment increases, resulting in greater risk reward to the downside. Support in USDCAD remains at 1.2920, while the 20DMA sits at 1.2950.

IG Client Positioning Sentiment notes that the combination of current sentiment and recent changes provides a mixed USDCAD trading bias. For full client positioning click here

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.