USD/CAD – Canadian Dollar Lower, Canadian CPI and Retail Sales Ahead

The Canadian dollar is under pressure and has posted losses in the Friday session. On the release front, Canada publishes CPI and Core Retail Sales, so we could see some volatility from USD/CAD during the North American session. In the US, today’s highlight is the inauguration of Donald Trump as president. The sole economic event is a speech from FOMC member from Patrick Harker.

It’s Inauguration Day in the United States, as the eyes of the world are on Donald Trump, who will be sworn in as the 45th president. Trump’s stunning victory in November has triggered strong gains for the US dollar and the stock market, and there is no arguing that the US economy is robust. Nonetheless, there is a feeling of unease in the air, as confidence and hope are starting to give way to confusion and uncertainty, as Trump has failed to outline any specifics on his economic policies, while continuing to tangle with the media and fire off controversial Twitter messages. How will the dollar react when Trump rolls up his sleeves and begins work on Monday morning? Earlier on Friday, Oanda’s Stephen Innes provided the following assessment:

the downside risk for the USD remains elevated more so from Trump’s inauguration if he fails to underscore economic policy. On the other hand, if Donald comes out firing on all fiscal stimulus cylinders, bond yield will surge, and the greenback would catch an enormous updraft… the President–elect takes centre stage as we begin a new chapter in American politics and global financial markets. Buckle up; we are likely in for a wild ride in the coming 100 days [see the link below for the full article]

We begin a new chapter for the US Dollar

It’s been a dismal week for the Canadian dollar, which is down 2.5 percent. The currency sagged on Wednesday, after pessimistic comments from the Bank Canada. BoC Governor Stephen Poloz expressed his unease about the new US administration, saying he expected Canada to take a “material” hit from a much more protectionist United States after Donald Trump becomes president. Poloz added that the bank was closely monitoring its southern neighbor and biggest economic partner, and that a rate cut was on the table. The Canadian dollar lost further ground on Thursday and USD/CAD is currently within striking distance of the 1.34 level.

BoC Pessimism Sends CAD Sharply Lower

USD/CAD Fundamentals

Friday (January 20)

  • 8:30 Canadian CPI. Estimate 0.0%
  • 8:30 Canadian Core Retail Sales. Estimate 0.1%
  • 8:30 Canadian Retail Sales. Estimate 0.5%
  • 8:30 Canadian Trimmed Core CPI
  • 8:30 Canadian Core CPI. Estimate 0.2%
  • 9:00 US FOMC Member Patrick Harker Speech
  • Tentative – President Trump Speech

*All release times are GMT

*Key events are in bold

USD/CAD for Friday, January 20, 2017

USD/CAD January 20 at 6:50 EST

Open: 1.3321 High: 1.3378 Low: 1.3282 Close: 1.3367

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3003 1.3120 1.3253 1.3371 1.3457 1.3599
  • USD/CAD edged lower in the Asian session. In European trade, the pair has reversed directions and posted considerable gains
  • 1.3253 has strengthened in support
  • 1.3371 was tested earlier in resistance and is a weak line

Further levels in both directions:

  • Below: 1.3253, 1.3120, 1.3003 and 1.2922
  • Above: 1.3371, 1.3457 and 1.3599
  • Current range: 1.3253 to 1.3371

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in the Friday session. Currently, long positions have a slight majority (53%), indicative of slight trader bias towards USD/CAD continuing to move higher.

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.