USD/CAD – Canadian Dollar Steady as Housing Reports a Mixed Bag

The Canadian dollar has ticked higher in the Thursday session. Currently, the pair is trading at 1.2562, down 0.07% on the day. On the release front, Canadian housing numbers were mixed. The New Housing Price Index edged lower to 0.0%, shy of the estimate of 0.1%. This was the first time the index failed to post a gain since January 2015. There was better news from Housing Starts, which was almost unchanged at 216 thousand, beating the forecast of 211 thousand. In the US, unemployment claims dropped down to 221 thousand, well below the estimate of 232 thousand. The 4-week average claims dropped to 224,500, its lowest level since 1973. On Friday, Canada releases key employment data – Employment Change and the unemployment rate.

The US dollar has posted broad gains this week, boosted by strong volatility in the stock markets. On Monday, the Dow Jones posted its biggest one-day loss, and US markets have pointed downwards for much of the week. The catalyst for the stock market slide is concern that inflation could rise in the US, which in turn would trigger additional rate hikes from the Fed. This would make the US dollar more attractive against other currencies. With investor risk appetite sharply lower, the Canadian dollar is under strong pressure. Earlier in the day, USD/CAD touched a high of 1.2598, its highest level since late December.

Canadian indicators disappointed on Tuesday. Canada’s trade deficit widened from C$2.5 billion to C$3.2 billion, well above the estimate of C$2.3 billion. The export sector has been steady, but uncertainty over NAFTA is a dark cloud over the economy, and exports could suffer if the trilateral free trade pact is not renewed. The US has threatened to leave the pact if the Canada and Mexico do not agree to major concessions, such as increasing the percentage of US content in auto parts produced under NAFTA. Elsewhere, Canadian Ivey PMI continues to point to expansion, but slowed to 55.2, down from 60.4 in the previous release. This was well off the forecast of 60.7 points.

USD/CAD Fundamentals

Thursday (February 8)

• 8:15 Canadian Housing Starts. Estimate 211K. Actual 216K
• 8:30 Canadian NHPI. Estimate 0.1%. Actual 0.0%
• 8:30 US Unemployment Claims. Estimate 236K
• Tentative – US Mortgage Delinquencies
• 10:30 US Natural Gas Storage. Estimate -116B
• 12:45 BoC Senior Deputy Governor Carolyn Wilkins Speaks
• 13:01 US 30-year Bond Auction

Friday (February 9)

• 8:30 Canadian Employment Change. Estimate 10.3
• 8:30 Canadian Unemployment Rate. Estimate 5.8%

*All release times are GMT

*Key events are in bold

USD/CAD for Thursday, February 8, 2018

USD/CAD, February 8 at 8:00 EDT

Open: 1.2668 High: 1.2598 Low: 1.2550 Close: 1.2590

USD/CAD Technical

USD/CAD inched lower in the Asian session and has posted small gains in European trade

• 1.2494 is providing support
• 1.2630 is the next resistance line
• Current range: 1.2494 to 1.2630

Further levels in both directions:

• Below: 1.2494, 1.2351, 1.2190 and 1.2060
• Above: 1.2630, 1.2757 and 1.2855

OANDA’s Open Positions Ratio

USD/CAD ratio is showing  movement towards short positions. Currently, long positions have a majority (53%), indicative of trader bias towards USD/CAD continuing to move upwards.

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.