USD/CAD has ticked higher in the Wednesday session. Currently, the pair is trading at 1.3506, up 0.09% on the day. On the release front, the Bank of Canada sets the benchmark rate and will release a rate statement. In the U.S., the sole event is the Richmond Manufacturing Index, which is projected to climb to 6 points. On Thursday, the U.S. releases Preliminary GDP and unemployment claims.
All eyes are on the Bank of Canada, with rate-setters expected to take a pass and maintain rates at 1.75%, where they have been pegged since October. With this in mind, investors will be looking for clues about future moves from the rate statement. Will policymakers sound positive about the economy? The labor market created a record number of jobs in April (106 thousand), and consumer spending has been solid. At the same time, trade tensions between the U.S. and China have soared, which has hurt risk appetite towards minor currencies like the Canadian dollar. As well, oil prices have fallen, which has weighed on the Canadian currency. USD/CAD has been fairly subdued in recent weeks, and the tone of rate statement, whether optimistic or dovish, could cause some volatility in the pair.
The U.S. economy continues to perform well, and first-quarter economic growth is expected to remain above the 3% level. Preliminary GDP will be released on Thursday and is expected to post a healthy gain of 3.1%. In April, the initial release came in at 3.2%, easily beating the estimate of 2.2%. If the revised reading also beats expectations, traders can expect the greenback to move higher.
