USD/CAD – Canadian Dollar Takes Roller-Coaster Ride as Trump Takes White House

USD/CAD has posted sharp losses in the Wednesday session, as the pair trades just above the 1.34 line. The pair pushed above the 1.35 line before retracting to the 1.34 level. The volatility is in reaction to the shocking news on Wednesday that Donald Trump has won the US presidential election. Trump garnered 276 electoral votes, beating Hillary Clinton who won 218 electoral votes. On the economic front, there are no major releases out of US and no indicators in Canada. On Thursday, the US will publish unemployment claims, with the estimate standing at 267 thousand.

As Clinton was widely expected to cruise to the White House, Donald Trump’s upset election victory has stunned global markets (a Reuters release on Monday said that Clinton had a 90 percent  chance of winning). Equity and currency markets are in turmoil as the unthinkable has become reality. Trump’s victory speech was diplomatic and conciliatory, helping the markets to start to settle down after a tumultuous Asian session. The US dollar has posted strong gains against minor currencies like the Canadian dollar. Earlier on Wednesday, USD/CAD jumped above the 1.35 line, its highest level since February. The volatility that we’re seeing indicates that global markets were poorly positioned heading into the vote, overconfident that voters would reject Trump and hand Clinton a victory.

The news of a Trump electoral victory also shook up the odds of a December rate hike by the Federal Reserve. The odds dropped as low as 40 percent earlier in the day, but have recovered and actually increased. Currently, the markets have priced in at quarter-point hike at 76 percent, up from 71 percent just prior to the election. We could see further movement in the odds in the aftermath of the Trump victory, but it’s looking quite positive for a rate hike, which would mark the first rate move by the Fed since last December.

USD/CAD Fundamentals

Wednesday (November 9)

  • 10:00 US Final Wholesale Inventories. Estimate 0.2%
  • 10:30 US Crude Oil Inventories. Estimate 1.3M
  • 13:01 US 10-year Bond Auction

Thursday (November 10)

  • 13:30 US Unemployment Claims. Estimate 267K

*All release times are EDT

*Key events are in bold

USD/CAD for Wednesday, November 9, 2016

USD/CAD November 9 at 8:30 GMT

Open: 1.3294 High: 1.3525 Low: 1.3259 Close: 1.3412

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3120 1.3253 1.3371 1.3457 1.3551 1.3648
  • USD/CAD posted strong gains in the Asian session but has given up a large portion of these gains in the European session
  • 1.3371 has switched to a support role following strong gains by USD/CAD
  • 1.3457 was tested in resistance earlier and could face pressure during the North American session

Further levels in both directions:

  • Below: 1.3371, 1.3253, 1.3120 and 1.3028
  • Above: 1.3457, 1.3551 and 1.3648
  • Current range: 1.3371 to 1.3457

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Wednesday session, despite sharp movement from USD/CAD. Currently, short positions command a strong majority (70%), indicative of trader bias towards USD/CAD reversing directions and moving to lower ground.

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.