USD/CAD – New trade deal boosts Canadian dollar

The Canadian dollar is unchanged in the Tuesday session. In the North American session, USD/CAD is trading at 1.2815, down 0.02% on the day. On the release front, there are no Canadian events and one minor U.S indicator. On Wednesday, the U.S releases two key events – ADP nonfarm payrolls and ISM Non-Manufacturing PMI.

After months of grueling talks, Canadian and U.S negotiators finally hammered out a trade agreement on Monday, which paves the way for a new trade agreement between Canada, Mexico and the United States. The NAFTA agreement, which was a pillar of the Canadian economy for 24 years, will give way to the USMCA – the U.S-Mexico-Canada Agreement. Under the new pact, Canada’s auto sector will be shielded from U.S tariffs, and in return, U.S farmers will have more access to Canada’s highly protected dairy industry. News of the historic agreement has boosted the Canadian dollar, and the currency continues to impress, having gained 2.4% since mid-September against the greenback.

In the U.S, consumer spending and confidence levels remain strong. Consumer spending rose 0.3% in August, matching the forecast. The UoM Consumer Sentiment report pushed above the 100-level for the first time since March, although the reading of 100.1 missed the estimate of 100.5 points. On the inflation front, the Core PCE Price Index, which is the Federal Reserve’s preferred inflation indicator, dipped to 0.0% in August, shy of the estimate of 0.1%. This was the first time the indicator failed to post a gain since March 2017. Still, inflation remains close to the Fed’s target of 2%, so a December rate hike remains likely.

Oil has sprung another gusher

Risk sentiment is shifting and headline-driven

USD/CAD Fundamentals

Tuesday (October 2)

  • All Day – US Total Vehicles
  • 12:45 US Fed Chair Powell Speaks

Wednesday (October 3)

  • 8:15 ADP Nonfarm Employment Change. Estimate 187K
  • 10:00 US ISM Nonfarm Manufacturing PMI. Estimate 58.1
  • 16:00 US Fed Chair Powell Speaks

*All release times are DST

*Key events are in bold

USD/CAD for Tuesday, October 2, 2018

USD/CAD, October 2 at 8:35 DST

Open: 1.2816 High: 1.2841 Low: 1.2800 Close: 1.2813

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2545 12649 1.2733 1.2831 1.2970 1.3067

USD/CAD ticked lower in the Asian session. In European trade, the pair edged higher but has given up these gains

  • 1.2970 is a support level
  • 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 1.2733
  • Above: 1.3067, 1.3160, 1.3292 and 1.3436

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.