USD/CAD – Canadian Dollar Pauses After Strong Week

The Canadian dollar is trading sideways in the Monday session. Currently, USD/CAD is trading at 1.2891, down 0.04% on the day. On the release front, there are no data releases in Canada or the US. We’ll hear from three FOMC members – William Dudley, Loretta Mester, Randal Quarles. On Tuesday, the key event of the day is US CB Consumer Confidence.

Canadian consumer data was positive on Friday, helping propel the Canadian dollar to gains of 1.6% last week. CPI, ticked lower to 0.6% but beat the estimate of 0.4%. Retail Sales rebounded with a gain of 0.9%, after a sharp loss of 1.8% in the previous release. This reading matched the estimate. There was good news south of the border, as Core Durable Goods Orders rebounded with a strong gain of 1.2%, crushing the estimate of 0.5%. This marked the strongest gain since July 2016. Durable Goods Orders jumped to an 8-month high, with a gain of 3.1%. The reading easily beat the forecast of 1.6%. The US manufacturing sector continues to expand at an impressive clip, a result of stronger global growth and a cheaper US dollar, which makes US goods less expensive for foreign buyers.

Canada is heavily dependent on exports, so the specter of a global trade war could be disastrous for the Canadian economy. There is considerable worry in Ottawa, as US President Trump seems intent on “righting wrongs” in US trade balances by applying the hedge hammer of tariffs. On Thursday, US President Trump slapped 25% tariffs on up to $60 billion worth of Chinese imports on Thursday. For its part, China wasted no time in threatening to retaliate, saying it was planning to impose tariffs on 128 US products, which amounted to $3 billion in imports. The tariffs directed against China come on the heels of tariffs on steel imports coming into the US, although the US has exempted Canada and some other countries. There is serious concern that these moves could lead to a downturn in the Chinese economy and cause a global recession, a nightmarish scenario for Canadian policymakers.

Manic Monday or Just Singing the Stock Market Blues ?

Trade War Worries Ease as Risk Appetite Rebounds

 

USD/CAD Fundamentals

Monday (March 26)

  • 12:30 US FOMC Member William Dudley Speaks
  • 16:30 US FOMC Member Loretta Mester Speaks
  • 19:10 US FOMC Member Randal Quarles Speaks

 Tuesday (March 27)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.1%
  • 10:00 US CB Consumer Confidence. Estimate 131.2
  • 10:00 US Richmond Manufacturing Index. Estimate 23
  • 11:00 US FOMC Raphael Bostic Speaks

*All release times are GMT

*Key events are in bold

 

USD/CAD for Monday, March 26, 2018

USD/CAD, March 26 at 8:00 EST

Open: 1.2896 High: 1.2896 Low: 1.2841 Close: 1.2885

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2687 1.2757 1.2850 1.2930 1.3050 1.3165

USD/CAD ticked lower in the Asian session and has recovered in European trade

  • 1.2850 was tested earlier in support
  • 1.2930 in the next resistance line
  • Current range: 1.2850 to 1.2930

Further levels in both directions:

  • Below: 1.2850, 1.2757 and 1.2687
  • Above: 1.2930, 1.3050, 1.3165 and 1.3260

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in the Monday session. Currently, short positions have a majority (58%), indicative of USD/CAD breaking out 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.