USD/CAD – Canadian Dollar Subdued as US Posts Mixed CPI Data

The Canadian dollar is unchanged in the Thursday session. Early in the North American session, USD/CAD is trading at 1.3430. On the release front, Canadian Foreign Securities Purchases dropped to C$11.77 billion. In the US, CPI numbers were a mix, as CPI matched expectations at 0.4%, but Core CPI came in at 0.1% shy of the estimate of 0.2%. Unemployment Claims sparkled at 235 thousand, much lower than the estimate of 257 thousand. On Friday, Canada releases Core CPI, with the estimate standing at 0.3%.

U.S. Consumer Prices Post Largest Gain in 6 Months

The Trump victory in the US election was a huge upset which caused turmoil across global markets. The shock has started to subside, and market sentiment is currently very favorable towards the dollar, which is on a roll against most major currencies. A Trump presidency, bolstered by a Republican-controlled Congress) could signal a looser fiscal policy and significant tax cuts. If this scenario materializes, inflation would likely climb, leading to higher interest rates and hence a stronger dollar. At the same time, Trump remains an enigma – aside from being “pro-business”, his political and economic agendas are unclear. This lack of certainty means the markets could be in for plenty of surprises with Trump in office, which could translate into volatility in the currency markets.

With the Federal Reserve meeting for a policy meeting in December, expectations are sky-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 a remarkable 90 percent, so barring some sharp negative data out of the US, we’ll see a rate hike before the end of 2016.

Yellen Testimony and Inflation Data Eyed

 

USD/CAD Fundamentals

Thursday (November 17)

  • 8:30 Canadian Foreign Securities Purchases. Estimate C$12.23B. Actual C$11.77B
  • 8:30 US Building Permits. Estimate 1.19M. Actual 1.23M
  • 8:30 US CPI. Estimate 0.4%. Actual 0.4%
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
  • 8:30 US Philly Fed Manufacturing Index. Estimate 8.1 points. Actual 7.6 points
  • 8:30 US Unemployment Claims. Estimate 257K. Actual 235K
  • 8:30 US Housing Starts. Estimate 1.16M Actual 1.32M 
  • 8:50 US FOMC Member William Dudley Speech
  • 10:00 US Fed Chair Janet Yellen Testifies
  • 10:30 BoC Review
  • 10:30 US Natural Gas Storage. Estimate 34B
  • 12:30 US FOMC Member Lael Brainard Speech

Friday (November 18)

  • 8:30 Canadian Core CPI. Estimate 0.3%

*All release times are EST

*Key events are in bold

USD/CAD for Thursday, November 17, 2016

USD/CAD November 17 at 8:40 EST

Open: 1.3426 High: 1.3450 Low: 1.3398 Close: 1.3432

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3120 1.3253 1.3371 1.3457 1.3551 1.3648
  • USD/CAD has shown little movement in the Asian and European sessions.
  • 1.3371 is providing support
  • 1.3457 is a weak resistance line

Further levels in both directions:

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

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Thursday session. Currently, short positions command a strong majority (62%), indicative of trader bias towards USD/CAD breaking out 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.