The Canadian dollar is subdued in the Wednesday session. Currently, USD/CAD is trading at 1.3019, up 0.03% on the day. On the release front, there are no Canadian events. PPI is expected to rise to 0.3% and Core PPI is forecast to remain pegged at 0.2%. The Federal Reserve is expected to raise the benchmark rate by a quarter-point. On Thursday, the U.S will release retail sales reports and unemployment claims, and Canada publishes a housing inflation report.
It’s been a quiet day for the Canadian dollar, but that could change after the Federal Reserve meets on Wednesday. The Fed is widely expected to raise rates to a range between 1.75% and 2.0%. The odds of a quarter-point move stand at 96% percent, according to the CME Group. Although a rate hike has been priced in by the markets, such a significant move could boost the US dollar against its rivals. Investors are still uncertain whether the Fed will raise rates three or four times in 2018. Investors will be paying close attention to the rate statement and the “dot-plot” forecasts, looking for any clues regarding rate hikes in the second half of 2018. The Fed is currently projecting a total of three hikes this year, but a strong economy and rising inflation have raised speculation that the Fed could raise rates four times in 2018.
The Singapore Summit was a milestone, as it marked the first time that leaders of the United States and North Korea met face-to-face. However, the joint statement put out by Presidents Trump and Kim was short on details, which could explain a lack of movement in the currency markets following the summit. The joint statement reaffirmed North Korea’s full commitment to complete denuclearization, but there was no mention of a timetable or any verification mechanisms. Even if the summit was largely symbolic, there’s no denying that tensions have significantly eased and that the summit could mark a first step in bringing peace to the Korean peninsula.
