USD/CAD – Canadian Dollar Takes Breather After Sharp Gains

The Canadian dollar has steadied on Monday, after surging in the Friday session. In North American trade, USD/CAD is trading at 1.2684, down 0.02% on the day. On the release front, there are no Canadian events on the schedule. The US will release Factory Orders, with an estimate of -0.3%. On Tuesday, Canada releases Trade Balance and the ISM Non-Manufacturing PMI.

After some stumbling on Friday, the US Senate passed a tax reform bill on the weekend. The vote was a squeaker, with 51 Republicans voting yes, against 48 Democrats and 1 Republican. The Senate vote is a big win for President Trump, who wants to sign a tax bill before Christmas. The Senate and House must now reconcile their two bills, and the new uniform bill will then have be passed in both houses. Investors are pleased with the bill, and the US dollar has responded to the vote with broad gains.

There was unexpected positive news on Friday, as Canadian employment change soared to 79.5 thousand, crushing the estimate of 10.2 thousand. This marked 12 straight months of job gains and helped drive the unemployment rate down to 5.9%. There was more good news, as the September GDP rebounded with a gain of 0.2%, edging above the estimate of 0.1%. The impressive numbers boosted the Canadian dollar by some 1.6% on Friday, its strongest 1-day gain in 2017. Will the Bank of Canada reconsider its monetary policy? A rate hike remains unlikely before April 2018, although red-hot numbers in the fourth quarter could mean that the BoC will adjust and raise rates more quickly.

USD/CAD Fundamentals 

Monday (December 4)

  • 10:00 US Factory Orders. Estimate -0.3%

Tuesday (December 5)

  • 8:30 Canadian Trade Balance. Estimate -2.3B
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2

*All release times are GMT

*Key events are in bold

USD/CAD for Monday, December 4, 2017

USD/CAD, December 4 at 8:00 EDT

Open: 1.2686 High: 1.2727 Low: 1.2656 Close: 1.2690

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2368 1.2494 1.2630 1.2757 1.2860 1.3015

USD/CAD posted small gains in the Asian session but has retracted in European trade

  • 1.2630 is providing support
  • 1.2757 is the next resistance line
  • Current range: 1.2630 to 1.2757

Further levels in both directions:

  • Below: 1.2630, 1,2494, and 1.22368
  • Above: 1.2757, 1.2860 and 1.3015

OANDA’s Open Positions Ratio

USD/CAD ratio showed sharp gains in long positions, consistent with strong losses by USD/CAD on Friday. Currently, long positions have a majority (57%), indicative of trader bias towards USD/CAD breaking out and moving 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.