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USD/CAD – Soft Canadian Dollar Above 1.33, US Consumer Confidence Next

USD/CAD has posted slight losses in the Tuesday session, as the pair trades slightly above the 1.33 line. On the release front, today’s highlight in the US is CB Consumer Confidence, with the indicator expected to drop to 101.5 points. There are no Canadian releases on Tuesday. On Wednesday, the US releases New Home Sales.

The Canadian dollar is struggling, losing 1.7% late last week. This followed the Bank of Canada’s rate decision to maintain its benchmark rate at 0.50%, where it has been pegged since July 2015. The bank downgraded forecasts for economic growth, projecting GDP to grow 1.1 percent in 2016, down from its forecast of 1.3 percent in July. For 2017, growth is expected at 2.0 percent, down from 2.2 percent in July. The bank stated that the lower forecasts were a result of weaker housing demand and lower export forecasts. On Monday, the Canadian government and the BoC renewed the inflation target of 2 percent until 2021 [1].

With the US labor market close to capacity, jobless claims surprised the markets by climbing to 260 thousand on Thursday, higher than expected. This marked the first reading since August that the key indicator has not beaten the estimate. Still, the dollar didn’t lose any ground, as the 4-week daily average of jobless claims remains excellent. There was good news from the manufacturing front, as the Philly Fed Manufacturing Index posted a strong gain of 9.7 points, easily beating the forecast of 5.2 points. On the inflation front, US consumer inflation numbers were a mixed bag. CPI edged up to 0.3%, up from 0.2% a month earlier. This was the strongest gain since April. Core CPI went the opposite direction, slipping to 0.1%, down from 0.3% a month earlier. These numbers could have an important bearing on the Fed’s interest rate decision in December. Currently, a December rate hike is currently priced in at 68 percent, as market sentiment remains high that the Fed will press the rate trigger before the end of the year.

USD/CAD Fundamentals

Tuesday (October 25)

Wednesday (October 26)

*All release times are EDT

*Key events are in bold

USD/CAD for Tuesday, October 25, 2016

USD/CAD October 25 at 7:50 GMT

Open: 1.3348 High: 1.3335 Low: 1.3308 Close: 1.3310

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3028 1.3120 1.3253 1.3371 1.3457 1.3587

Further levels in both directions:

OANDA’s Open Positions Ratio

USD/CAD ratio is showing short positions with a majority (67%), indicative of trader bias towards USD/CAD continuing to move to lower ground.

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 [5]

Market Analyst at OANDA [6]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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