USD/CAD – Canadian Dollar Steady, Wholesale Sales Next

The Canadian dollar has edged higher in the Tuesday session, after posting strong gains on Monday. Currently, USD/CAD is trading at 1.2769, down 0.16% on the day. On the release front, there are no key indicators on the schedule. Canada releases Wholesales Sales and the US publishes the Richmond Manufacturing Index. On Wednesday, the Federal Reserve will release the minutes of its May policy meeting.

The Canadian dollar posted strong gains on Monday, erasing the losses seen on Friday. The currency ended the week on a soft note as core retail sales declined 0.2%, well off the estimate of 0.5%. This marked a 4-month low. Inflation remained steady, as CPI came in at 0.3% in April, matching the estimate. On an annualized basis, inflation was up 2.2% in April, the third straight month it exceeded the Bank of Canada inflation target of 2.0%.

There was a dramatic development in the China-US tariff battle on Sunday, as US Treasury Secretary Steven Mnuchin said that the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants have traded stiff tit-for-tat tariffs in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite in tariffs means that the US can sit down with the Chinese and discuss the massive US trade deficit with China, which President Trump has long complained is a result of a non-level playing field with China.

Are the NAFTA negotiations in trouble? It appears that the parties remain far apart on a deal, and even an ‘agreement in principle’ between Canada, the US and Mexico seems unlikely at present. Meanwhile, the Trump administration has given both Canada and Mexico another 30-day exemption on steel and aluminum tariffs, lasting until June 1. Last week, US Commerce Secretary Wilbur Ross said that further extensions could be granted, depending on the progress made in the NAFTA talks. Ottawa has demanded “full and permanent” exemptions from the tariffs, but may have to cough up more concessions in the NAFTA talks in order to convince Washington to exempt Canadian steel and aluminum imports from tariffs.

  A test of the breakouts

USD/CAD Fundamentals

Tuesday (May 22)

  • 8:30 Canadian Wholesale Sales. Estimate 0.9%
  • 10:00 US Richmond Manufacturing Index. Estimate 9

Wednesday (May 23)

  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

 

USD/CAD for Tuesday, May 22, 2018

USD/CAD, May 22 at 7:50 DST

Open: 1.2789 High: 1.2789 Low: 1.2749 Close: 1.2769

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2527 1.2687 1.2757 1.2850 1.2943 1.3015

USD/CAD was flat in the Asian session and has shown limited movement in European trade

  • 1.2757 was tested earlier in support and remains a weak line
  • 1.2850 is the next line of resistance
  • Current range: 1.2757 to 1.2850

Further levels in both directions:

  • Below: 1.2757, 1.2687 and 1.2527
  • Above: 1.2850, 1.2943, 1.3015 and 1.3125

OANDA’s Open Positions Ratio

USD/CAD ratio is showing movement towards long positions. Currently, short and long positions are evenly split, indicative of a lack of trader bias towards USD/CAD.

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.