USD/CAD is trading quietly to start the week, as the pair trades slightly above the 1.38 line in the European session. US markets are closed for a holiday on Monday. With no US or Canadian releases on Monday, the pair will likely continue to show marginal movement throughout the day.
Federal Reserve Chair Janet Yellen testified before Congress last week, and her message was markedly different than the upbeat statement from the Fed back in the heady days of December. At that time, the Fed raised rates by 0.25%, the first upward move in a decade, and hinted at a series of rate hikes in 2016. Fast forward to February, and Yellen discussed negative interest rates. The Fed has ruled out making such a move in the past, and this is unlikely to change. Still, it is a relevant scenario, with the Bank of Japan joining the ECB in implementing negative rates. Yellen noted that inflation rates have remained very low due to the strong US dollar and weak oil prices. Given the current economic situation, many experts expect no more than two rate hikes this year, perhaps in June and December. At the same time, any improvement in key US numbers will heat up speculation about a possible March hike.
Canadian Prime Minister Justin Trudeau was quoted as saying that the budget will not be balanced by the end of his term if current macro economic conditions continue to worsen. Next month’s budget, the first to be presented by the new Liberal government, is expected to include fiscal stimulus to help a limping economy. How much stimulus can we expect? That question remains the object of speculation as the Bank of Canada (BoC) is also awaiting the actual budget to analyze the changes to monetary policy it needs to implement if fiscal stimulus fails to reignite the economy. PM Trudeau stressed the negative impact that lower oil prices have had on the Canadian economy. The collapse of oil has hit the Canadian dollar hard, as USD/CAD went as high as 1.4690 in January, its highest level since March 2003.
USD/CAD for Monday, February 15, 2016
USD/CAD February 15 at 7:30 EST
Open: 1.3835 Low: 1.3798 High: 1.3842 Close: 1.3827
- USD/CAD posted losses in the Asian session but has reversed directions in European trade
- 1.3757 is providing support
- There is resistance at the round number of 1.3900
- Current range: 1.3757 to 1.3900
Further levels in both directions:
- Below: 1.3757, 1.3587 and 1.3457
- Above: 1.39, 1.4019 and 1.4159
Monday (Feb. 15)
- There are no US or Canadian events on the calendar
Upcoming Key Events
Tuesday (Feb. 16)
13:30 Canadian Manufacturing Sales. Estimate 0.9%
*Key events are in bold
*All release times are EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar
OANDA’s Open Positions Ratio
In the USD/CAD ratio, short positions retain a slight majority of positions (53%). This points to trader bias towards the Canadian dollar heading lower.
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.