USD/CAD has edged lower in the Monday session. Currently, the pair is trading at 1.2474, down 0.24% on the day. On the release front, Canadian Wholesale Sales, slowed to 0.7%. This was shy of the estimate of 1.0%. On Tuesday, the US will release the Richmond Manufacturing Index, with an estimate of 19 points.
It’s Day Three of the US government shutdown, which began Friday at midnight when the Senate failed to approve a short-gap spending bill. Without funding, many non-essential government services have been forced to shut down. Democrats and Republicans are now playing the ‘blame game’ and pointing fingers at who is responsible for the crisis. The Democrats refused to vote for the spending measure until a deal is hammered out over Daca, a program for children who are illegal immigrants that Trump has threatened to deport. Lawmakers are scrambling to reach common ground, and on Sunday, Senate majority leader, Mitch McConnell suggested that he would allow a vote on immigration reform in February if Democrats agree to fund the government. With congressional elections looming, both parties will not want to anger voters, so we could see the crisis resolved this week.
As 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.
Monday (January 22)
- 8:30 Canadian Wholesale Sales. Estimate 1.0%. Actual 0.7%
Tuesday (January 23)
- 10:00 US Richmond Manufacturing Index. Estimate 19
*All release times are GMT
*Key events are in bold
USD/CAD for Monday, January 22, 2018
USD/CAD, January 22 at 8:05 EDT
Open: 1.2475 High: 1.2496 Low: 1.2457 Close: 1.2465
USD/CAD edged higher in the Asian session and is showing little movement in European trade
- 1.2351 is providing support
- 1.2494 is a weak 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
USD/CAD ratio is showing slight movement towards long positions. Currently, long positions have a majority (61%), 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.