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 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
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.
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