USD/CAD – Unchanged as US Consumer Inflation Matches Expectations

USD/CAD has ticked higher in the Tuesday session. In North American trade, USD/CAD is trading at 1.2850, up 0.05% on the day. On the release front, there are no Canadian indicators for a second straight day. Bank of Canada Stephen Poloz will speak at an event in Kingston, Ontario. In the US, CPI and Core CPI both slowed to 0.2%. On Wednesday, the US releases key inflation and consumer spending reports.

The Canadian dollar had a winning week, boosted by strong job numbers on Friday. The Canadian economy added 15.4 thousand jobs in February, after a sharp decline of 88 thousand a month earlier. This was below the estimate of 21.3 thousand, but investors were pleased with the strong turnaround. South of the border, employment numbers were a mix on Friday. Wage growth dropped to 0.1% in February, down from 0.3% a month earlier. This missed the estimate of 0.2%, and marked the lowest gain in four months. The news was much better from nonfarm payrolls, which soared to 313 thousand, crushing the estimate of 205 thousand.

The markets are keeping a close eye on the Federal Reserve, which holds its next policy meeting next week. The Fed is widely expected to raise rates for the first time this year, but the real question is how many hikes we’ll see in 2018. The Fed projection remains at three rate hikes, but strong economic data, especially from inflation indicators, could push the Fed to raise its forecast. Higher US  interest rates makes the greenback more attractive to investors. With the Canadian economy showing more slack than its neighbor, and the uncertainties swirling around the future of NAFTA, it’s unlikely that the Bank of Canada will be able to match the Fed pace of rate hikes, meaning that strong headwinds could lay ahead for the Canadian currency.

U.S CPI As Expected, Four U.S Rate Hikes Questioned

USD/CAD Fundamentals

Tuesday (March 13)

  • 6:00 US NFIB Small Business Index. Estimate 107.1. Actual 107.6
  • 8:30 US CPI. Estimate 0.2%. Actual 0.2%
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
  • 10:15 BoC Governor Stephen Poloz Speaks
  • 13:01 US 30-year Bond Auction

Wednesday (March 14)

  • 8:30 US Core Retail Sales. Estimate 0.3%
  • 8:30 US PPI. Estimate 0.1%
  • 8:30 US Retail Sales. Estimate 0.3%
  • 8:30 US Core PPI. Estimate 0.2%

*All release times are GMT

*Key events are in bold

USD/CAD for Tuesday, March 13, 2018

USD/CAD, March 13 at 8:45 EST

Open: 1.2844 High: 1.2867 Low: 1.2830 Close: 1.2848

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2630 1.2757 1.2865 1.2920 1.3014 1.3165

USD/CAD ticked higher in the Asian session and has edged higher in European trade

  • 1.2865 is fluid. Currently, it is a weak support
  • 1.2920 is the next line in resistance
  • Current range: 1.2865 to 1.2920

Further levels in both directions:

  • Below: 1.2865, 1.2757, 1.2630 and 1.2514
  • Above: 1.2920, 1.3014 and 1.3165

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Tuesday session. Currently, short positions have a majority (60%), indicative of trader bias towards USD/CAD reversing directions and moving lower.

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.