USD/CAD – Canadian Dollar Ticks Higher Ahead of Manufacturing PMIs

The Canadian dollar has started the trading week quietly. In the Monday session, USD/CAD is trading at 1.2878, down 0.16% on the day. Today’s focus in on manufacturing reports. Canada will release Manufacturing PMI, and the key event in the US is ISM Manufacturing PMI.

Are we at the onset of a new global trading war? On Monday, China responded to recent US tariffs, imposing its own duties on a range of US goods, including frozen pork and wines. This move is bound to escalate tensions between the two economic giants, and has raised fears that a new global trade war could be underway. If the tit-for-tat measures continue, both the US and Chinese economies could suffer, which could lead to a global slowdown. Both sides are digging in tough and pointing fingers, and if tensions worsen, the volatility we’ve seen in the markets is likely to continue.

Canadian indicators wrapped up the week on a low note. Canada’s GDP in January contracted 0.1%, missing the estimate of +0.1%. This marked the first decline since August. There was more disappointing news on the inflation front, as the Raw Materials Price Index declined 0.3%, well below the estimate of a 2.8% gain. In the US, unemployment claims impressed, dropping to 215 thousand. This easily beat the estimate of 230 thousand. Consumer confidence also improved, as UoM Consumer Sentiment rose to 101.4, breaking past the 100-barrier for the first time since October. However, the indicator missed the estimate of 101.9 points.

USD/CAD Fundamentals

 Monday (April 2)

• 9:30 Canadian Manufacturing PMI
• 9:45 US Final Manufacturing PMI. Estimate 55.7
• 10:00 US ISM Manufacturing PMI. Estimate 60.1
• 10:00 US Construction Spending. Estimate 0.4%
• 10:00 US ISM Manufacturing Prices. Estimate 72.5

*All release times are GMT

*Key events are in bold

USD/CAD for Monday, April 2, 2018

USD/CAD, April 2 at 6:00 EST

Open: 1.2898 High: 1.2902 Low: 1.2875 Close: 1.2878

USD/CAD Technical

USD/CAD showed little movement in the Asian session and has edged lower in European trade

• 1.2850 is providing weak support
• 1.2930 is 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 showing little movement in the Monday session. Currently, short positions have a majority (54%), indicative of USD/CAD continuing to move lower.

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