USD/CAD – Canadian Dollar Steady, Construction Reports Next

It’s been a quiet start to the week for USD/CAD, with the pair trading at 1.3340 in Tuesday’s European session. On the release front, the sole event on the schedule is the NFIB Small Business Index. Canada will release two construction reports. Housing Starts are expected to rise to 181 thousand, while Building Permits are forecast to post a sharp drop of 2.2%.

The Canadian dollar has recovered nearly 10 percent since late January, when the USD/CAD touched a high of 1.4690. Strong economic indicators, the rise of oil prices and the growing doubts about a Fed rate hike prior to mid-2016 have boosted the Canadian currency. The BOC will announce its benchmark rate on Thursday, with the central bank is not expected to lower the current rate of 0.50%. The market is now focused on the Federal budget on March 22, which is expected to contain a stimulus package to bolster the economy, which has taken a hit due to the crash in oil prices. The BOC will likely monitor the effects of the expected stimulus on the economy for several months, and will make a decision about rates depending on growth and inflation levels.

Last week’s US job data was mixed. Nonfarm Payrolls impressed with a reading of 242 thousand in January, much higher than the estimate of 195 thousand. This was much stronger than the previous (revised) reading of 171 thousand. The US economy has added an average of 225,000 jobs per month since December, an impressive number considering that the economy has softened in the early part of 2016. Still, employment news was mixed, as wage growth declined by 0.1%, shy of the estimate of a 0.2% gain. This marked the first drop in wages since December 2014. This indicator is closely linked to inflation, since an increase in wages means workers have more money to spend. The indicator’s decline means that that Federal Reserve’s inflation target of about 2.0% remains far off, so the Fed, which is keeping a close eye on the weak inflation picture, is unlikely to press the rate trigger at its policy meeting later this month.

USD/CAD for Tuesday, March 8, 2016

USD/CAD March 8 at 5:40 EST

Open: 1.3290 Low: 1.3279 High: 1.3349 Close: 1.3343

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3097 1.3223 1.3318 1.3457 1.3587 1.3757
  • USD/CAD has posted slight gains in the Asian session and leveled off in European trade
  • 1.3318 remains busy and could see further action during the day. It is currently a weak support level
  • There is resistance at 1.3457
  • Current range: 1.3318 to 1.3457

Further levels in both directions:

  • Below: 1.3318, 1.3223 and 1.3097
  • Above: 1.3457, 1.3587 and 1.3757

USD/CAD Fundamentals

Tuesday (March 8)

  • 6:00 US NFIB Small Business Index. Estimate 94.5
  • 8:15 Canadian Housing Starts. Estimate 181K
  • 8:30 Canadian Building Permits. Estimate -2.2%

Upcoming Key Events

Wednesday (March 9)

  • 10:00 BOC Rate Statement
  • 10:00 Canadian Overnight Rate. Estimate 0.50%

*Key events are in bold

*All release times are EST

For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

OANDA’s Open Positions Ratio

USD/CAD ratio has shown little movement this week, consistent with the lack of activity from USD/CAD. Long and short positions are close to an even split, which points to a lack of trader bias as to what direction USD/CAD will take next.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.