USD/CAD – Canadian Dollar Slips, 1.30 in Sight

The Canadian dollar has posted considerable losses in the Tuesday session. USD/CAD is trading at 1.2961, up 0.62% on the day. On the release front, Canadian Housing Starts dropped to 214 thousand, shy of the estimate of 218 thousand. The US will release JOLTS Jobs Openings and Federal Reserve Chair Jerome Powell will speak at an event in Zurich. Later in the day, US President Trump will make a major announcement, as he decides whether the US will leave the nuclear agreement with Iran. On Wednesday, the US releases PPI reports and Canada publishes Building Permits.

The NAFTA negotiations continue this week, as senior officials from Canada, the US and Mexico are meeting in Washington to try and hammer out a new trilateral trade agreement. However, progress has been slower than hoped for, and a major stumbling block remains a US demand to raise the North American content of automobiles in order to avoid tariffs. Mexico is suspicious that the US is pushing a deal that will bring manufacturing jobs from Mexico back to the US. There are serious time constraints on reaching an agreement. Mexico is holding a general election in early July, and US President Trump wants to wrap up a deal before mid-term elections in November.

The Federal Reserve’s newest regional Fed president, Thomas Barkin, delivered a major speech on Monday, and his tone was decidedly upbeat. Barkin said that the economy is “remarkably strong: above-trend growth, low unemployment, inflation at target”. Barkin added that although the labor market is strong, it is not causing pressure on wages, but low unemployment should lead to an increase in inflationary pressures. As for upcoming rate increases, Barkin was careful to remain mum on how many rate hikes he expects this year. The Fed raised rates in March by a quarter-point and continues to forecast two additional increases this year. However, some policymakers are calling for three more hikes, given the strong health of the US economy.

Italian Politics Weighs on the Euro

Markets Caught Between Opposing Forces

Crucial Week for NAFTA Begins

USD/CAD Fundamentals

Tuesday (May 8)

  • 3:15 Federal Reserve Chair Jerome Powell Speaks
  • 6:00 US NFIB Small Business Index. Estimate 105.2. Actual 104.8
  • 8:15 Canadian Housing Starts. Estimate 218K
  • 10:00 US JOLTS Job Openings. Estimate 6.02M
  • Tentative – US IBD/TIPP Economic Optimism. Estimate 51.3
  • 14:00 US President Trump Speaks

Wednesday (May 9)

  • 8:30 Canadian Building Permits
  • 8:30 US PPI. Estimate 0.2%
  • 8:30 US Core PPI. Estimate 0.2%

*All release times are DST

*Key events are in bold

USD/CAD for Tuesday, May 8, 2018

USD/CAD, May 8 at 8:30 DST

Open: 1.2882 High: 1.2985 Low: 1.2876 Close: 1.2961

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2757 1.2850 1.2943 1.3015 1.3125 1.3223

USD/CAD ticked higher in the Asian session and has posted additional gains in European trade.

  • 1.2943 was tested earlier in support. It is a weak line
  • 1.3015 is the next line of resistance
  • Current range: 1.2943 to 1.3015

Further levels in both directions:

  • Below: 1.2943, 1.2850, 1.2757 and 1.2687
  • Above: 1.3015, 1.3125 and 1.3223

OANDA’s Open Positions Ratio

USD/CAD ratio is showing slight movement towards long positions. Currently, short positions have a majority (57%), indicative of trader bias towards USD/CAD reversing directions and moving downwards.

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.