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USD/CAD – Canadian Dollar Shrugs off Soft Building Permits

USD/CAD is almost unchanged in the Thursday session, as the pair trades at 1.3430. On the release front, Canadian Building Permits posted a sharp decline of 2.5%, well short of the estimate of a 1.4% gain. In the US, unemployment claims dropped sharply to 234 thousand, easily beating the forecast of 251 thousand. The week wraps up with a host of employment indicators. Canada will publish Employment Change and the unemployment rate, while the US releases three key events – Nonfarm Employment Change, Average Hourly Earnings and the unemployment rate.

The Canadian dollar continues to struggle, and a major reason is weak oil prices. Despite OPEC cutting production levels, the world remains awash in oil, as increasing US production has offset the OPEC cuts. US Crude Inventories continue to show surpluses, most of which have been higher than the forecast. This was the case again last week, with US crude inventories posting a strong gain of 1.6 million. The indicator has posted 12 surpluses in the last 13 weeks, which has helped keep oil prices close to the $50 level.

The Federal Reserve released the minutes of its March policy meeting on Wednesday. At that meeting, the Fed raised rates a quarter-point to 0.75%, but the dovish rate statement disappointed the markets, triggering broad losses for the US dollar. In the minutes, policymakers noted upside risk to the US economy, but remained divided on whether inflation will rise to the Fed target of 2.0%. Most policymakers were in favor of taking steps to trim the $4.5 trillion balance sheet, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. So what’s next for the Fed? According to the CME’s Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent. Last week, FOMC member Eric Rosengren called for three more hikes, saying the Fed should raise rates in June, September and December. Rosengren said that employment and inflation levels were close to the Fed’s targets, and that three additional hikes were needed in order to prevent the US economy from overheating. However, a majority of FOMC members are in favor of just two more hikes this year.

Fed Minutes Show a Divided Central Bank on Trump and Inflation [1]

Canada: International Merchandise Trade, February 2017 [2]

USD/CAD Fundamentals

Thursday (April 6)

Upcoming Key Events

Friday (April 7)

*All release times are GMT

*Key events are in bold

USD/CAD for Thursday, April 6, 2017

USD/CAD April 6 at 9:00 EST

Open: 1.3436 High: 1.3451 Low: 1.3415 Close: 1.3435

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3120 1.3253 1.3371 1.3461 1.3551 1.3672

Further levels in both directions:

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Thursday session. Currently, short positions have a majority (62%), indicative of trader bias towards USD/CAD breaking out and moving 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.

Kenny Fisher

Kenny Fisher [6]

Market Analyst at OANDA [7]
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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