USD/CAD – Canadian Dollar Higher, CPI Next

The Canadian dollar has posted gains in the Friday session. Currently, the pair is trading at 1.2310, down 0.53% on the day. On the release front, there are two key indicators, either of which could impact on USD/CAD. Canada releases CPI,which is expected to decline 0.3%. The US will publish Advance GDP, which is forecast to post a strong gain of 3.0%.

On Thursday, Canada and the US both posted mixed numbers, and the Canadian dollar didn’t show much movement. Canadian Core Retail Sales jumped 1.6% in November, crushing the estimate of 0.8%. This marked the strongest gain since January. Retail Sales couldn’t keep pace, as the small gain of 0.2% missed the estimate of 0.7%. In the US, unemployment claims rose to 233 thousand, but still beat the estimate of 239 thousand. Housing numbers continue to soften, as New Home Sales fell to 625 thousand, well off the estimate of 679 thousand. This follows the trend we saw earlier in the week, when Existing Home Sales slowed to 5.57 million, short of the estimate of 5.72 million.

The Canadian economy has been performing fairly well, and recent employment numbers have been much stronger than expected. However, there is a dark cloud on the horizon regarding NAFTA. The free trade agreement is critical for the Canadian economy, so threats by US President Trump to blow up the agreement are causing genuine concern for the government and the Bank of Canada. Negotiations between Canada, Mexico and the US, which are slated to end in March, have not yielded much progress, with the US side reportedly showing little flexibility. Trump has repeatedly said he is unhappy with the deal, and may prefer a new bilateral agreement between the US and Canada. At the same time, there are also many US companies that benefit from the current deal and are opposed to the US pulling the plug. If NAFTA is terminated, it’s a good bet that the Canadian dollar will take a tumble.

U.S Dollar Shackled to Trumps Trade and Twitter Rants

USD/CAD Fundamentals

Friday (January 26)

  • 8:30 Canadian CPI. Estimate -0.3%. 
  • 8:30 US Advance GDP. Estimate 3.0%
  • 8:30 US Core Durable Goods Orders. Estimate 0.5%
  • 8:30 US Advance GDP Price Index. Estimate 2.3%
  • 8:30 US Durable Goods Orders. Estimate 0.9%

*All release times are GMT

*Key events are in bold

USD/CAD for Friday, January 26, 2018

USD/CAD, January 26 at 7:20 EDT

Open: 1.2377 High: 1.2391 Low: 1.2305 Close: 1.2310

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.1903 1.2060 1.2190 1.2351 1.2494 1.2630

In the Asian session, USD/CAD posted slight gains but then retracted. The pair has lost further ground in the European session

  • 1.2190 is providing support
  • 1.2351 has switched to a resistance role following losses by the pair. This line could see more activity in the North American session
  • Current range: 1.2190 to 1.2351

Further levels in both directions:

  • Below: 1.2190, 1.2060 and 1.1903
  • Above: 1.2351, 1.2494, 1.2630, and 1.2757

OANDA’s Open Positions Ratio

USD/CAD ratio is showing slight movement towards long positions. Currently, long positions have a majority (58%), 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

Market Analyst at OANDA
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, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.