USD/CAD – Canadian Dollar Steady as Manufacturing Sales Posts Gain

USD/CAD is unchanged in the Friday session. In North American trade, the pair is trading slightly above the 1.33 line. On the release front, Canadian Manufacturing Sales gained 0.6% in January, marking a third straight gain. In the US, today’s highlight is US Preliminary UoM Consumer Sentiment, which is expected to improve to 97.1 points.

As widely expected, the Federal Reserve raised rates by a quarter-point on Wednesday. The rate hike, the second in just three months, raised the benchmark lending rate to a 0.75%-1% range. The dollar reacted negatively, declining broadly against its major rivals. This was largely due to disappointment with the Fed, which sent a more dovish message than the markets wanted to hear. Leading up the rate announcement, there had been speculation that a red-hot US economy would propel the Fed to accelerate its pace of monetary tightening, with possibly four rate hikes this year. Instead, Fed Chair Janet Yellen reiterated that further rate hikes would be “gradual” and left its “dot plot” unchanged, with a projection for three rate hikes in 2017. As well, the US dollar may have lost ground due to traders and investors acting on “buy on rumor, sell on fact”. This large-scale selling of US dollars after the Fed hike has sent the US dollar broadly lower, and the Canadian dollar has taken advantage, gaining 1.1 percent this week.

 

One-Minute Round Up: A ‘Less Hawkish’ Fed Has the Market Rethinking Strategy

Oil remains under pressure, and weak crude prices could weigh on the Canadian dollar. West Texas crude plunged 8.7 percent last week and dipped below the $47 level this week. US Crude Oil Inventories finally reversed directions, posting a drawdown of 0.2 million barrels, compared to an estimate of 3.3 million. This decline comes after the indicator posted 11 surpluses in the past 12 weeks, reflective of increasing US shale production. OPEC cobbled together a deal to cut production which began on January 1, but the expected jump in oil prices has failed to materialize, as the increase in US production has more than offset the OPEC cutbacks.

USD/CAD Fundamentals

Friday (March 17)

  • 8:30 Canadian Manufacturing Sales. Actual 0.6%
  • 9:15 US Capacity Utilization Rate. Estimate 75.5%
  • 9:15 US Industrial Production. Estimate 0.3%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.1
  • 10:00 US CB Leading Index. Estimate 0.4%
  • 10:00 US Preliminary U0M Inflation Expectations
  • Tentative – US Labor Market Conditions Index

*All release times are GMT

*Key events are in bold

USD/CAD for Friday, March 17, 2017

USD/CAD March 17 at 9:00 EST

Open: 1.3321 High: 1.3346 Low: 1.3311 Close: 1.3320

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3006 1.3120 1.3253 1.3371 1.3461 1.3551
  • USD/CAD was flat in the Asian session and has shown choppiness in European trade
  • 1.3253 is providing support
  • 1.3371 is the next line of resistance

Further levels in both directions:

  • Below: 1.3253, 1.3120 and 1.3006
  • Above: 1.3371, 1.3461, 1.3551 and 1.3672
  • Current range: 1.3253 to 1.3371

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Friday session. Currently, short positions have a majority (57%), 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.