USD/CAD – Trump Victory Weighing on Canadian Dollar

The Canadian dollar remains under pressure on Monday. In the North American session, USD/CAD is trading at the 1.3540. On the release front, it’s a very quiet start to the week, there are no Canadian or US events on the schedule.  On Tuesday, the US will release retail sales reports.

Global markets were in turmoil last week following the stunning news that Donald Trump had won the US presidential election. The US dollar posted strong gains against most major currencies, and USD/CAD gained 1.3 percent last week. Currently, the pair is trading at its highest level since February. As the shock of a Trump presidency begins to wear off, investors and traders are asking what will a Trump election mean for the markets. Like much of his agenda, Trump’s economic platform is unclear. According to Bank of America Merrill Lynch, given that both houses of Congress are under Republican control, we could see Trump opt to loosen fiscal policy. This would lead to greater spending, causing more inflation. In turn, interest rates would move higher and bolster the US dollar. However, Trump remains an enigma, having never held public office. His ideology is unclear (if he has one), so the markets could be in for a period of uncertainty, at least in the early stages of the Trump administration. This could lead to prolonged volatility in the currency markets. As far as monetary policy is concerned, the odds of a rate hike in December also showed some volatility immediately after the election, but have jumped to a remarkable 85 percent, as all signs point to the first hike since last December.

USD/CAD Fundamentals

Monday (November 14)

• There are no Canadian or US releases on the schedule

Tuesday (November 15)

• 8:30 US Core Retail Sales. Estimate 0.5%
• 8:30 US Retail Sales. Estimate 0.6%

*All release times are EDT

*Key events are in bold

USD/CAD for Monday, November 14, 2016

USD/CAD November 14 at 8:20 GMT

Open: 1.3526 High: 1.3589 Low: 1.3520 Close: 1.3546

USD/CAD Technical

• USD/CAD posted gains in the Asian session and has shown limited movement in European trade
• 1.3457 is providing strong support
• 1.3551 is a fluid line. Currently, it is a weak resistance line

Further levels in both directions:

• Below: 1.3457, 1.3371, 1.3253 and 1.3120
• Above: 1.3551, 1.3648 and 1.3782
• Current range: 1.3457 to 1.3551

OANDA’s Open Positions Ratio

USD/CAD ratio has shown gains in long positions. Currently, short positions command a strong majority (64%), 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.