Canadian Dollar catches a bid on Monday as markets gear up for heavy central bank week

• Canadian Dollar climbs on Monday, catching a broad-market bid.
• Canada economic data is thin this week, but BoC Gov Macklem will make Friday appearance.
• US CPI inflation, Fed rate call and interest rate outlook to be the week’s linchpin.

The Canadian Dollar (CAD) eased higher on Monday, taking a slim but broad step up against its major currency peers as markets gear up for a hectic week that sees several high-impact central bank showings to round the corner into the end of the trading year.

Canada is largely absent from the economic calendar data docket this week, with only a smattering of low-tier data late Thursday and into Friday. The only event of note will be Bank of Canada (BoC) Governor Tiff Macklem’s appearance, slated for late Friday. BoC Governor Macklem will be giving a speech at the Economic Club of Toronto, with the speech text released fifteen minutes ahead.

The upcoming trading week will see significant focus on central bank action with a US inflation data kicker when US Consumer Price Index (CPI) inflation is released on Tuesday. Wednesday will be of particular note to CAD when the US Federal Reserve (Fed) releases its latest rate call as markets broadly forecast a hold at 5.25% to 5.5%.

The US Federal Open Market Committee (FOMC) will release its updated economic projections alongside its policy statement, and investors will be looking closely at any changes to the FOMC’s forward-looking interest rate projections, known as the “Dot Plot”. The Fed’s Monetary Policy Statement and rate call are slated for 19:00 GMT on Wednesday, with the FOMC Press Conference thirty minutes later at 19:30 GMT.

Daily Digest Market Movers: Canadian Dollar steps higher across the board in thin Monday action

• The Canadian Dollar is in the green to kick off the new trading week, climbing over a full percent against the Japanese Yen (JPY). 
• The CAD is hardening gains against the Aussie (AUD) and Kiwi (NZD), up four-tenths and a third of a percent against the Antipodeans, respectively.
• The CAD’s weakest performance on Monday is still on the high side, gaining over a tenth of a percent against the Swiss Franc (CHF) and the Pound Sterling (GBP), with an additional sixth of a percent against the US Dollar (USD) in Monday trading.
• The broader market’s key focus in the early week will be US inflation data with Tuesday’s CPI release.
• Market forecasts call for Core US CPI to climb at the near end of the tail with annualized inflation expected to hold steady.
• Headline MoM US CPI inflation is forecast to tick up from 0.0% to 0.1% for November, with the YoY expected to tick down from 3.2% to 3.1%.
• November’s Core US CPI is forecast to print at 0.3% versus October’s 0.2%, with consumer price growth (less food and energy prices) expected to hold flat at 4% for the year into November, still well above the Fed’s 2% target.
• Market could see positioning shifts on Tuesday as investors glean Fed forecasts from Tuesday’s CPI inflation print.

The Canadian Dollar (CAD) is bidding higher on Monday, seeing thin but determined gains against the US Dollar (USD) to keep the USD/CAD pair pinned below the 1.3600 handle.

Intraday action sees some consolidation for the USD/CAD between the 50-hour and 200-hour Simple Moving Averages (SMA) near 1.3585 and 1.3570, respectively. Bids have cycled inside last week’s late range between 1.3620 and 1.3560.

Daily candlesticks have the USD/CAD waffling just north of the 200-day SMA near 1.3515, and price action is set to see some rough chop with the pair caught between the 200-day SMA and the 50-day SMA near 1.3700. Technical resistance firms up at the 1.3600 handle, sandwiching prices between the major price level and the long-term moving average.

USD/CAD Hourly Chart

USD/CAD Daily Chart