Loonie Rises vs Weaker Greenback Ahead Of Potential Rate Hike

The Canadian dollar has been experiencing growth against some major currencies as analysts and traders expect another hike for the third time in this cycle.

The Loonie rose to nearly a week high against the greenback on Monday, with the USD falling against most of the major currencies. Investors are preparing for an interest rate hike by the Bank of Canada this week.

The probability of a rate hike tomorrow is around 90% according to the overnight index swaps market. The Canadian dollar at 9:18 a.m. EST was trading at C$1.2428 to the dollar, an increase of 0.2%.

The Canadian dollar was able to record some gains against the greenback, with analysts stating that the expected BOC hike was the reason behind its great performance.
The pair of AUD/CAD went up to 0.9909, NZD/CAD also increased to a high of 0.9081, GBP/CAD followed the trend by rising from 1.7076 to a high of 1.7165.
Tuesday 16th January.

Why is the Canadian dollar called the loonie?

Sterling Extends Gains But Price Data A Grim Test

The GBP extended its gain on Monday after recording its biggest surge in four months on Friday. The main catalyst is the sreports that indicated that Netherlands and Spain were open to a deal for Britain that will see them remain as close as possible to the EU trading bloc.

The Sterling went above the $1.37 line due to the general weakness of the greenback.

USD

The USD was the biggest loser among the top currencies on Monday as banks were closed for the MLK holiday.
The pair of GBP/USD went up from 1.3743 to a high of 1.3820, USD/JPY, on the other hand, slid from 110.56 to a low of 110.32, USD/CHF also decreased to 0.9631.

U.K. CPI eases year-on-year

The UK CPI report for December was released earlier today. The CPI went up by 0.4% month-on-month as expected and is faster than the 0.3% recorded for November.
Year-on-year, the CPI has gone up by 3.0% which is also what analysts expected. It is, however, slower compared to the 3.1% surge recorded in November.

JPY

The Japanese Yen outpaced the USD and came out the top currency during the London session earlier today.
USD/JPY decreased by 11 pips or -0.11%, to trade at 110.71, AUD/JPY also plunged by 13 pips or -0.15%, ending the session at 88.01, while NZD/JPY decreased by 10 pips or -0.12% to trade at 80.52

GBP

The GBP was affected in several ways after the release of UK’s CPI report. It became bearish though as the Sterling closed lower across the board as traders were more focused on the decrease experienced in the annual CPI and the miss in their core reading.
The pair of GBP/USD decreased by 24 pips or -0.18%, trading at 1.3762, GBP/JPY also went down by 29 pips or -0.19% to finish the session at 152.36, while GBP/CHF plunged by 15 pips or -0.11%, ending the session at 1.3269

Events of the week January 15th-19th 2018.

Canadian rate decision: Wednesday, 15:00.

Analysts expect the Bank of Canada to raise its interest rates for the third time in the current circle. It is expected to increase from 1% to 1.25%.
Australian jobs report: Thursday, 00:30. The country posted excellent job gains in November (61.6K) after it recorded a modest jump the month before. Employment rates still stand at 5.4%. Another gain is expected for December, with 15.2k jobs on the cards. The unemployment rate is expected to remain unchanged at 5.4%.

Chinese GDP: Thursday, 2:00.

As the second largest economy in the world, the development and economic growth of China impacts the rest of the world. In the third quarter of last year, China recorded an increase of 6.8% y/y which is line with market expectations. A minor decrease to 6.7% is forecasted for the fourth quarter.

US housing data: Thursday, 13:30.

For November, both the building permits and housing starts stood an annualized level of 1.3 million, which are above expectations and reaching new highs at the same time. The building permits are expected to decrease to 1.29 million while housing starts will likely decrease to 1.27 million units annualized.

Crude Oil Inventories: Thursday, 16:00.

Over the past two months, crude oil inventories have been declining, which in turn contributes to the rise in oil prices. With the prices of crude oil attaining new highs, this report is very important for both Loonie and Greenback traders. The oil price and that of greenback are inversely related.

US consumer sentiment: Friday, 15:00.

The first release of consumer sentiment by the University of Michigan will be the last event of the week. Consumers have been slightly less confident over the past sixty days, as the index reached 95.9 points in the final report of December. The first publication for January will give us an initial look at what to expect this year. Analysts are expecting a score of 97.2.

Slow Forex Trading

So far this week, our ForexSignal.com Trading Team has not yet sent any new Forex signals. This is not a concern, as we have learned in the past 20 years of trading – there is no benefit in forcing a trade when there is none.