USD/CAD – Canadian dollar subdued at 1.30

The Canadian dollar is trading sideways in the Monday session. Currently, USD/CAD is trading at 1.3019, down 0.13% on the day. On the release front, it’s a quiet start to the week. Canada releases foreign security purchases and the U.S publishes the Empire State Manufacturing Index, which is expected to slip to 23.2 points. On Tuesday, Canada releases Manufacturing Sales.

With only a handful of key fundamental events early in the week, investors will be keeping a close eye on the US-China trade spat. The two economic giants have already exchanged tariffs on the other’s products, and President Trump has threatened to sharply up the ante and impose tariffs of some $200 billion on China. Trump may be bluffing, but his rhetoric could torpedo trade talks with China. The timing of any new tariffs remains uncertain, as well as the level of the tariffs – will they be 10% or a far more punitive 25%? Investors remain on alert, and the specter of another tariff announcement from the U.S and the likely retaliatory response from China could boost the U.S. dollar this week. If the U.S does go ahead with further tariffs, it could put a chill on more than the equity markets. According to a report from UBS, a tariff of 10% on Chinese products could slow U.S growth in the fourth quarter and result in the Federal Reserve skipping a December rate hike.

Canadian and U.S negotiators continue to insist that the sides will hammer out a new NAFTA agreement, but investors have their doubts. There are have been no three-way talks since August, and last week, a senior Mexican negotiator said that Mexico would like to conclude a three-way agreement but was prepared to advance bilaterally with the United States. Ottawa cannot afford to be left out of NAFTA, and has made concessions to open up its dairy sector to US producers. However, President Trump could squeeze further concessions out of Canada before agreeing to a deal. If the deadlock continues, the uncertainty could weigh on the Canadian dollar.

Another 200 billion in tariffs looks more likely than not

No tariffs, now tariffs, what gives?

Markets flat on China tariff expectations

USD/CAD Fundamentals

Monday (September 17)

  • 8:30 Canadian Foreign Securities Purchases. Estimate 4.35B
  • 8:30 US Empire State Manufacturing Index. Estimate 23.2

Tuesday (September 18)

  • 8:30 Canadian Manufacturing Sales. Estimate 1.0%

*All release times are DST

*Key events are in bold

 

USD/CAD for Monday, September 17, 2018

USD/CAD, September 17 at 8:05 DST

Open: 1.3000 High: 1.3049 Low: 1.3014 Close: 1.3019

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2666 1.2831 1.2970 1.3067 1.3160 1.3292

USD/CAD showed limited movement in the Asian session and this trend has continued in European trade

  • 1.2970 is providing support
  • 1.3067 is the next resistance line
  • Current range: 1.2970 to 1.3067

Further levels in both directions:

  • Below: 1.2970, 1.2831 and 1.2666
  • Above: 1.3067, 1.3160, 1.3292 and 1.3386

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.