USD/CAD – Markets Brace for Weak Canadian Employment Report

USD/CAD is showing little movement in the Friday session. Currently, the pair is trading at 1.3140. On the release front, Canada releases employment change, which is expected to post a sharp decline of 10.1 thousand. In the US, today’s highlight is Preliminary UoM Consumer Sentiment, with the markets expecting a strong reading of 97.9 points.

US crude stockpiles continue to record surpluses. On Wednesday, Crude Oil Inventories made a splash, soaring 13.8 million barrels, according to the Energy Information Administration (EIA). The indicator has recorded five straight surpluses, easily exceeding forecasts on each occasion. The huge gain also marked the highest surplus since late October. Crude posted sharp losses on Tuesday, following the release of the API inventories report, which predicted a surplus of 14.2 million, compared to a forecast of 2.38 million. US crude prices are down 2.7 percent this week, as US oil production continues to increase. The EIA says that US production in 2017 will be the highest since 1970, so cuts from OPEC and Russia may not lead to higher oil prices, due to the steady increase in US crude production. The Canadian dollar is sensitive to crude fluctuations, and stronger oil prices would likely boost the Canadian dollar.

Donald Trump didn’t field much of an economic platform during the election campaign, but he did promise a significant fiscal boost through infrastructure spending and tax cuts. This led to a post-election euphoria in the markets and boosted the US dollar. Fast forward to February, and optimism has been replaced by caution and unease, as Trump continues to entangle himself in controversy, both with US trading partners and at home, with the media and Supreme Court. On Thursday, Trump said that the administration was working on a “phenomenal” tax plan, which would be released in a few weeks, although he gave no details. Trump’s plan is expected to lower taxes for both corporations and individuals, although tax reform promises to be a slow and daunting task, as changes to the US tax code can only be made by Congress. Still, the markets are hungry for any movement in this direction, and the US dollar could get a strong boost once Trump outlines his tax agenda.

USD/CAD Fundamentals

Friday (February 10)

  • 8:30 Canadian Employment Change. Estimate -10.1K
  • 8:30 Canadian Unemployment Rate. Estimate 6.9%
  • 8:30 US Import Prices. Estimate 0.4%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.9
  • 10:00 US Preliminary UoM Inflation Expectations
  • 14:00 US Federal Budget Balance

*All release times are GMT

*Key events are in bold

USD/CAD for Friday, February 10, 2017

USD/CAD February 10 at 7:05 EST

Open: 1.3137 High: 1.3158 Low: 1.3121 Close: 1.3147

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.2922 1.3003 1.3120 1.3253 1.3371 1.3461
  • USD/CAD edged lower in the Asian session but has recovered in European trade
  • 1.3120 is a weak support
  • 1.3253 is the next resistance line

Further levels in both directions:

  • Below: 1.3120, 1.3003, 1.2922 and 1.2815
  • Above: 1.3253, 1.3371 and 1.3461
  • Current range: 1.3120 to 1.3253

OANDA’s Open Positions Ratio

USD/CAD ratio is showing slight gains in long positions. Currently, long positions have a majority (56%), indicative of 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.