USD/CAD – Canadian Dollar Slightly Higher in Light Holiday Trade

USD/CAD is subdued in the Monday session. Currently, the pair is trading at 1.2433, down 0.22% on the day. On the release front, there are no Canadian or US events on the schedule. US markets are closed in observance of Martin Luther King Day. On Tuesday, the sole indicator is the US Empire State Manufacturing Index.

The Canadian dollar improved on Friday, as investors were not impressed with lukewarm numbers in the US. CPI slowed to 0.1%, down from 0.4% a month earlier. Core CPI was stronger, improving to 0.3%. Both indicators were within expectations, but pointed to weak inflation levels. On the bright side, consumer spending remained strong. December retail sales, boosted by Christmas shopping, were up 5.4% compared to a year ago. Although investors were not impressed with the December data, as the euro rally continued, the spending numbers point to a strong finish for the economy in 2017.

After strong gains in December, the Canadian dollar has held its own against the greenback in January. There are two important factors for this positive trend. First, Canada has recorded outstanding employment numbers in the past two months. In December, the economy added 78.6 thousand jobs, defying experts who predicted a minuscule gain of 1.8 thousand. This release comes on the heels of a superb November release, when the economy added 79.5 thousand news jobs. The unemployment rate dropped to 5.7% in December, down from 5.9% a month earlier. Second, the recent rise in oil prices, which are up 6.8% since mid-December, has boosted the commodity-based Canadian currency. The Bank of Canada is expected to raise rates later this week, which could boost the Canadian dollar. One dark cloud on the horizon, however, is NAFTA. The free-trade agreement, crucial to the Canadian economy, is in trouble, as US President Trump has threatened to cancel the pact, which could have serious ramifications and send the Canadian dollar sharply lower.

Dollar Deflates on Federal Holiday

Canadian Dollar Caught Between Hot Economy and Cold NAFTA

Monday (January 15)

  • There are no Canadian or US events

Tuesday (January 16)

  • 8:30 US Empire State Manufacturing Index. Estimate 18.5

*All release times are GMT

*Key events are in bold

 

USD/CAD for Monday, January 15, 2018

USD/CAD, January 15 at 8:05 EDT

Open: 1.2462 High: 1.2472 Low: 1.2405 Close: 1.2434

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2060 1.2190 1.2351 1.2494 1.2630 1.2757

USD/CAD ticked higher in the Asian session but has reversed directions and edged lower in European trade

  • 1.2351 is providing support
  • 1.2494 is the next resistance line
  • Current range: 1.2351 to 1.2494

Further levels in both directions:

  • Below: 1.2351, 1.2190 and 1.2060
  • Above: 1.2494, 1.2630, 1.2757 and 1.2860

OANDA’s Open Positions Ratio

In the Monday session, USD/CAD ratio is showing long positions with a majority (55%). This is indicative of trader bias towards USD/CAD reversing directions and moving to higher 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

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.