The Canadian dollar has edged lower in the Monday session. In the North American session, USD/CAD is trading at 1.2707, up 0.19% on the day. On the release front, Canadian banks are closed for Remembrance Day. In the US, the sole event is the Federal Budget Balance, with a deficit of $58.2 billion expected in October, after a surplus the month before.
The week ended on a sour note in the US, as consumer confidence disappointed. UoM Consumer Sentiment was unexpectedly soft on Friday, coming in at 97.8, missing the forecast of 100.8 points. Last week’s unemployment claims were a disappointment at 239 thousand, climbing to a 4-week high. Investor sentiment will not fall after one soft employment report, but there are some concerns with the US labor market. Nonfarm payrolls rebounded in October with a gain of 261 thousand, after a rare decline a month earlier. Still, this reading was well off the forecast of 312 thousand. Wage growth remains a problem, reflective of chronically low inflation. In October, Average Hourly Earnings posted a flat 0.0%, the first time wages have not increased since November 2016.
After staying on the sidelines in October, the Bank of Canada has left the markets guessing regarding a December rate hike. Last week, BoC Governor Stephen Poloz downplayed concerns about low inflation levels, as the inflation target of 2 percent remains elusive. The BoC will have to keep a close eye on developments south of the border. The Federal Reserve is almost certain to raise rates in December, and if the BoC does not match the hike, the Canadian dollar will likely weaken against the greenback. Another headache for the BoC is the threat from the US administration to pull out of the NAFTA agreement, which is a cornerstone of Canada’s economy. On his Asian trip, US President Trump has reiterated that he favors bilateral trade agreements, rather than multilateral arrangements. If Trump applies this stance to relations with Canada and Mexico, NAFTA could be in trouble, and this could bode badly for the Canadian dollar.
Monday (November 13)
- 14:00 US Federal Budget Balance. Estimate -58.2B
Tuesday (November 14)
- 5:00 US Federal Chair Janet Yellen Speaks
- 8:30 US PPI. Estimate 0.1%
- 8:30 US Core PPI. Estimate 0.2%
*All release times are GMT
*Key events are in bold
USD/CAD for Monday, November 13, 2017
USD/CAD, November 13 at 8:45 EDT
Open: 1.2682 High: 1.2711 Low: 1.2679 Close: 1.2706
USD/CAD inched lower in the Asian session but reversed directions and moved higher European trade
- 1.2701 has switched to a support role, but remains fluid.
- 1.2778 is the next line of resistance
- Current range: 1.2701 to 1.2778
Further levels in both directions:
- Below: 1.2701. 1.2598, 1.2441 and 1.2357
- Above: 1.2778, 1.2943 and 1.3032
OANDA’s Open Positions Ratio
USD/CAD ratio is showing slight movement towards long positions. Currently, long positions have a majority (57%), indicative of trader bias towards USD/CAD continuing to move higher.