USD/CAD – Canadian Dollar Trading Sideways, GDP Next

The Canadian dollar continues to show little movement this week. In the Tuesday session, the pair is trading at 1.2424, down 0.12% on the day. On the release front, there are no Canadian events. In the US, Consumer Confidence is expected to rise to 123.2 points. As well, President Trump will deliver his State of the Union address before Congress. On Wednesday, there are a host of key indicators in the US, led by ADP Nonfarm Employment Change. The Federal Reserve will release a monetary policy statement, with the markets expecting the benchmark rate to remain unchanged at a range between 1.25%-1.50%. Canada releases GDP for December, which is expected to climb to 0.4%.

The Federal Reserve will release a rate statement on Wednesday, the final one under Janet Yellen’s tenure. It’s a virtual certainty that the Fed will leaves rates unchanged this time around, although it’s likely that the Fed will raise rates by a quarter-point at the March meeting. Yellen will make way for Jerome Powell, who takes over as chair in early February. Powell is expected to hold the course on monetary policy, which was marked by small, incremental interest rates in order to keep the US economy from overheating.

The markets have become accustomed to GDP releases above 3.0% in the US, so Advance GDP for Q4 was disappointing. The reading of 2.6% fell short of the estimate of 3.0%. The economy grew 2.3% in 2017, compared to 1.6% in 2016. Growth in Q4 was affected by stronger consumer spending, which led to a surge in imports. At the same time, the increase in consumer spending also boosted inflation, as the personal consumption expenditures index, which the Fed prefers to use, rose 1.9% in the fourth quarter, up from 1.3% in Q3. Meanwhile, the US manufacturing sector is booming, as durable goods orders in December hit 2.9%, crushing the estimate of 0.6%. This was the highest gain in six months, and helped make 2017 a banner year. Durable good orders increased 5.8% in 2017, the sharpest expansion since 2011.

USD/CAD Fundamentals

Tuesday (January 30)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.3%
  • 10:00 US CB Consumer Confidence. Estimate 123.2
  • 21:00 President Trump Speaks

Wednesday (January 31)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 191K
  • 8:30 US Employment Cost Index. Estimate 0.5%
  • 8:30 Canadian GDP. Estimate 0.4%
  • 8:30 Canadian RMPI. Estimate -2.2%
  • 9:45 US Chicago PMI. Estimate 64.3
  • 10:00 US Pending Home Sales. Estimate 0.5%
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.50%

*All release times are GMT

*Key events are in bold

 

USD/CAD for Tuesday, January 30, 2018

USD/CAD, January 30 at 8:15 EDT

Open: 1.2340 High: 1.2380 Low: 1.2310 Close: 1.2424

USD/CAD Technical

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

USD/CAD edged higher in the Asian session. In European trade, the pair posted slight gains but has retracted.

  • 1.2190 is providing support
  • 1.2351 was tested earlier in resistance and is under pressure. 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 almost unchanged in the Tuesday session. Currently, long positions have a majority (59%), 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.