USD/CAD – Canadian Dollar in Holding Pattern Ahead of BoC Rate Decision

The Canadian dollar is unchanged in the Wednesday session. In North American trade, USD/CAD is trading at 1.3270. On the release front, the US releases JOLTS Job Openings, with the indicator expected to rise to 5.53 million. Crude Oil Inventories will also be released, with the estimate standing at -1.4 million barrels. The Bank of Canada will set its benchmark rate, which is expected to remain at 0.50 percent. On Thursday, the US releases unemployment claims, with the indicator expected to rise to 272 thousand.

Earlier in the week, the Canadian dollar climbed to its highest level since mid-October. The currency, which is sensitive to oil prices, was buoyed by the unexpected OPEC production agreement, which triggered a surge in crude prices. The improvement in the Canadian dollar has eased pressure on the BoC to lower rates. The bank is expected to maintain the rate at 0.50 percent, where it’s been pegged since July 2015. Analysts will be monitoring the rate statement, which will be the first since Donald Trump won the US presidential election. The US is easily Canada’s largest trading partner, and Trump’s economic policies will have a significant effect on the Canadian economy. The BoC had predicted third quarter growth of 3.2%, but the economy beat this projection, expanding at a clip of 3.5%.

Bank of Canada to Keep Rates Unchanged

The Federal Reserve will meet next week and the markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and sentiment towards the US dollar remains high. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has said he will increase governmentspending and cut taxes. This could lead to higher inflation levels, which means the Fed may need to adjust its outlook.

USD/CAD Fundamentals

Wednesday (December 7)

  • 10:00 US JOLTS Jobs Openings. Estimate 5.53M
  • 10:30 US Crude Oil Inventories. Estimate -1.4M
  • 15:00 US Consumer Credit. Estimate 17.5B
  • 10:00 BoC Rate Statement
  • 10:00 BoC Overnight Rate. Estimate 0.50%

Thursday (December 8)

  • 8:30 US Unemployment Claims. Estimate 272K

*All release times are EST

*Key events are in bold

USD/CAD for Wednesday, December 7, 2016

USD/CAD December 7 at 9:00 EST

Open: 1.3276 High: 1.3293 Low: 1.3262 Close: 1.3280

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3026 1.3120 1.3253 1.3371 1.3457 1.3551
  • USD/CAD showed limited movement in the Asian and European sessions
  • 1.3253 remains a weak support line
  • 1.3371 is the next resistance line

Further levels in both directions:

  • Below: 1.3253, 1.3120 and 1.3026
  • Above: 1.3371, 1.3457, 1.3551 and 1.3648
  • Current range: 1.3253 to 1.3371

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Wednesday session. Currently, short and long positions are evenly split, indicative of a lack of trader bias as to what direction USD/CAD will take next.

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.