USD/CAD – Canadian Dollar Quiet Ahead of Key Manufacturing Report

USD/CAD is trading sideways in the Friday session. Currently, the pair is trading at 1.2426, up 0.07% on the day. On the release front, there are two key releases on the schedule. Canada will release Manufacturing Sales, which are expected to rebound with a strong gain of 1.9%. The US publishes UoM Consumer Sentiment, with an estimate of 97.0 points.

As was widely expected, the Bank of Canada pressed the rate trigger on Wednesday, raising interest rates by 25 basis points, from 1.00% to 1.25%. However, traders hoping for a stronger loonie were disappointed, as dovish comments from BoC Governor Stephen Poloz kept the currency from making headway against the US dollar. Poloz noted his concerns over NAFTA, the three-way free trade agreement which is crucial to the Canadian economy. US President Trump has threatened to cancel the pact unless Mexico and Canada make major concessions to the US. If the agreement is terminated, the Canadian dollar would likely take a tumble. Another round of negotiations is slated to be held in Montreal next week, and a lack of progress could weigh on the Canadian dollar.

Capitol Hill is in the headlines on Friday, as a Federal government shutdown will take effect at midnight Friday, if Congress does not vote on a short-term spending bill. The House of Representatives passed such a bill on Thursday, but Republicans face a tougher battle in the Senate. A 60-seat majority is needed for the measure to pass, which means that the Republicans, who have a 51-49 majority, will need substantial support from the Democrats. However, many Democrat lawmakers are incensed over President Trump’s threat to deport young illegal immigrants and his recent inflammatory language against immigrants from poor countries. A government shutdown last occurred in 2013, and resulted in temporary layoffs for 800,000 non-essential Federal workers. With an election year in 2018, lawmakers from both parties will not want to anger voters, so we could see a last minute compromise which prevents a shutdown. However, if the shutdown takes place, risk appetite could dampen, and that could mean minor currencies like the Canadian dollar could be under pressure.

U.S Dollar Shutdown

Friday (January 19)

  • 8:30 Canadian Foreign Securities Purchases. Estimate 15.76B
  • 8:30 Canadian Manufacturing Sales. Estimate 1.9%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 1.9%
  • 12:15 US FOMC Member Randle Quarles Speaks
  • 10:00 US Preliminary UoM Inflation Expectations

*All release times are GMT

*Key events are in bold

USD/CAD for Friday, January 19, 2018

USD/CAD, January 19 at 7:35 EDT

Open: 1.2416 High: 1.2436 Low: 1.2399 Close: 1.2426

USD/CAD Technical

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

USD/CAD edged higher in the Asian session and is showing little movement 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 Friday session, USD/CAD ratio is showing long positions with a majority (61%). This is indicative of trader bias towards USD/CAD continuing to move 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.