The Canadian dollar has posted small gains on Tuesday, as USD/CAD trades at the 1.30 line at the start of the North American session. Canadians have elected a new government, as the Liberal party, headed by Justin Trudeau, easily won a majority of seats and handily defeated the incumbent Conservatives. In economic news, US housing numbers were a mix, while Canadian Wholesales disappointed, posting a decline of 0.1%. Traders should keep a close eye on Wednesday’s rate announcement from the Bank of Canada, as well as the follow-up press conference. A surprise rate cut would likely send the Canadian dollar sharply lower.
After an awful summer, the Canadian dollar has rebounded in the past three weeks, gaining about 400 points. The loonie has benefitted from higher prices for oil, a key Canadian export. As well, expectations that the Federal Reserve might raise rates in October failed to materialize, disappointing the markets and pushing the US dollar lower against other currencies. USD/CAD hasn’t shown much reaction to the Canadian election results. Justin Trudeau, son of former prime minister Pierre Trudeau, won a convincing majority over the Conservatives, as Prime Minister Stephen Harper failed to win a fourth mandate. The BOC will make an interest rate announcement on Wednesday, and most analysts expect the central bank to hold rates at the current level of 0.50%. Still the central bank cut rates twice this year, surprising the markets on both occasions. So a rate cut, while unlikely, should not be ruled out.
The markets got their first look at key data this week, as US Building Permits dipped to 1.10 million, short of expectations. US Housing Starts improved to 1.21 million, beating the forecast of 1.14 million. US key numbers on Friday were mixed. UoM Consumer Sentiment, the primary gauge of consumer confidence, jumped to 92.1 points in October, up from 85.7 points. This easily beat the estimate of 88.8 points. At the same time, JOLTS Job Openings slipped to 5.37 million, way off the estimate of 5.77 million. The JOLTS release is especially important as it is watched closely by the Fed and is a factor in its decision-making process regarding monetary policy.
Tuesday (Oct. 20)
- 12:30 US Building Permits. Estimate 1.16M. Actual 1.10M.
- 12:30 US Housing Starts. Estimate 1.14M. Actual 1.20M.
- 12:30 Canadian Wholesale Sales. Estimate +0.2%. Actual -0.1%.
- 13:00 FOMC Member William Dudley Speaks.
- 13:15 FOMC Member Jerome Powell Speaks.
- 15:00 Federal Reserve Chair Janet Yellen Speaks.
Wednesday (Oct. 21)
- 14:00 BOC Monetary Policy Report
- 14:00 BOC Rate Statement. Estimate 0.50%
- 15:15 BOC Press Conference
*Key releases are highlighted in bold
*All release times are GMT
USD/CAD for Tuesday, October 20, 2015
USD/CAD October 20 at 12:35 GMT
USD/CAD 1.3006 H: 1.3047 L: 1.2978
- USD/CAD was uneventful in the Asian session. In European trading, the pair posted slight gains but then retracted.
- 1.2930 has switched to a support role.
- 1.3063 is under pressure as resistance.
- Current range: 1.2930 to 1.3063
Further levels in both directions:
- Below: 1.2798, 1.2646 and 1.2552
- Above: 1.2930, 1.3063, 1.3165 and 1.3213
OANDA’s Open Positions Ratio
USD/CAD ratio is pointing to a slight gain in short positions on Tuesday, as long and short positions are almost evenly split. This is indicative of a lack of bias as to what traders expect next from USD/CAD.
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.