It's been another day of developments for the US economy, as it continues to go from pace to pace. So far the good news keeps coming in with Standard and Poor's upping their forecast for US GDP in 2018 to 2.8% (2.6% exp), however with a low rating of 2.2% in 2019. Nevertheless forecasting that far out is very difficult to say the least, and a lot can happen in a year if the current political climate is anything to go by. For the equity traders though it has been a year of highs so far and the good times kept rolling today for the S&P 500 as traders continued to feel that the long term gains from the Tax bill will off-set any short term pain that is expected.
The S&P 500 has for me been the standout of 2017 and continues to be a standout in 2018 as the bulls have taken every chance to push it higher. After seeing a mixed bag of trading today we saw some jumps lower on the chart, but the bulls managed to fight back and it closed out after touching 2750 briefly and falling back down. By no means though is this a doji candle, as the body is outside the previous candle. However, it may be a case of the bulls taking a pause here as there has been a lot of pressure and at some point you will need to take profit. If we see a push higher, once again it's the psychological levels that will be important with 2775 being the likely next target. Any falls lower will find support at 2725 and of course 2700, which will be quite a strong level for any bears in the market to test.
Up north in Canada and thinks are starting to heat up there with all the major Canadian banks now expecting a rate hike from the Bank of Canada. This will put pressure on the USDCAD which has seen some bearish movements for some time, but it should come as no surprise as most believe it's warranted in the current economic climate that the BoC does raise interest rates. Employment figures continue to be strong and wage growth is expected to rise putting pressure on inflation, the only thing that could derail things would be the US breaking NAFTA. However, for now that seems a little while off and not the main focus for CAD traders.
USDCAD traders today saw a minor uptick from the bulls as the USD was stronger, however for the most part in recent times it has been falling and the bullish BoC sentiment may be the driver to push it lower to key support levels at 1.2256 and 1.2108. In the event though that the bulls do come back into the market then I would expect the market to lift higher to 1.2628 and even potentially 1.2759 on the chart. All in all, the market may be coy though until it gets its BoC figure, but for now I am expecting some volatility to shine through.