USD/CAD – Canadian Dollar Subdued, US Retail Sales Shines

The Canadian dollar is showing limited movement on Tuesday, following an uneventful Monday session. In North American trade, USD/CAD is trading at 1.3530. On the release front, US Core Retail Sales and Retail Sales posted identical gains of 0.8 percent, as both indicators beat their estimates. The Empire State Manufacturing Index gained 1.5 points, beating the forecast of -1.5.  There are no Canadian indicators on Tuesday. On Wednesday, the US releases PPI, while Canada will publish Manufacturing Sales.

The US dollar has looked sharp since the Trump election win last week, a stunning result and caused turmoil in the global markets. USD/JPY has slipped 3.9 percent in the past week. Market sentiment is currently very favorable towards the dollar, as a Trump presidency (together with a Republican-controlled Congress) could signal a looser fiscal policy and a cut in taxes. This would likely result in greater inflation, which would lead to higher interest rates and hence a stronger dollar. At the same time, Donald Trump remains a political enigma, and aside from being “pro-business”, he has been very short on specifics with regard to an economic platform. This lack of certainty means we could be in for plenty of surprises from President Trump, which could translate into volatility in the currency markets.

With the Federal Reserve policy meeting just a month away, expectations are high that the Fed will press the trigger and raise rates by a quarter-point for the first time in a year. There have been several false starts before, but this time should be different. The Fed has sent out strong signals that it will raise rates, and in the past two rate decisions, some FOMC members voted for an immediate rate hike. The odds of a rate rise currently stand at an impressive 86 percent, so barring some sudden negative data, we appear headed for a rate hike before the end of 2016.

USD/CAD Fundamentals

Tuesday (November 15)

• 8:30 US Core Retail Sales. Estimate 0.5%. Actual 0.8%
• 8:30 US Retail Sales. Estimate 0.6%. Actual 0.8%
• 8:30 US Empire State Manufacturing Index. Estimate -1.5. Actual 1.5
• 8:30 US Import Prices. Estimate 0.4%
• 9:05 US FOMC Member Daniel Tarullo Speech
• 10:00 US Business Inventories. Estimate 0.2%
• 13:30 US FOMC Member Stanley Fischer Speech

Wednesday (November 16)

• 8:30 US PPI. Estimate 0.3%

*All release times are EST

*Key events are in bold

USD/CAD for Tuesday, November 15, 2016

USD/CAD November 15 at 8:40 EST

Open: 1.3538 High: 1.3553 Low: 1.3488 Close: 1.3527

USD/CAD Technical

• USD/CAD was flat in the Asian session and has recorded slight losses in European trade. The pair has posted slight gains early in the North American session
• 1.3457 continues to provide strong support
• 1.3551 was tested earlier in resistance and remains a weak 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 is showing little movement in the Tuesday session. Currently, short positions command a strong majority (66%), indicative of trader bias towards USD/CAD continuing to move 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.