USD/CAD – Canadian dollar moves higher as investor confidence improves

The Canadian dollar has gained ground in the Thursday session. Currently, USD/CAD is trading at 1.3092, down 0.49% on the day. On the release front, U.S, unemployment claims are expected to edge lower to 213 thousand. The ISM Manufacturing PMI is forecast to drop for a second straight month, with an estimate of 59.0 points. On Friday, traders should be prepared for volatility from USD/CAD, with key employment releases on both sides of the border.

The Canadian economy grew 0.1% in August, marking a seventh straight month of expansion. Higher oil production in Alberta and higher oil prices fueled the modest gain. The economy has been performing well and remains on track for annualized growth of 2% in 2018. Unemployment is at low levels and is expected to remain pegged at 5.9% for October. The Bank of Canada raised rates last week to 1.75%, and the hawkish message from the bank was a broad hint to the markets that further rate hikes are in store. With the economy operating close to full capacity, rate hikes are an effective method of ensuring that the economy does not overheat. The BoC is also mindful that the Federal Reserve is expected to raise rates again in December, which would mark a fourth rate hike in 2018. Policymakers do not want to see divergence widen between U.S and Canadian rates, and another rate hike from the BoC would be bullish for the Canadian dollar.

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USD/CAD Fundamentals

Thursday (November 1)

  • 7:30 US Challenger Job Cuts. Actual 153.6%
  • 8:30 US Preliminary Productivity. Estimate 2.2%
  • 8:30 US Preliminary Unit Labor Costs. Estimate 1.1%
  • 8:30 US Unemployment Claims. Estimate 213K
  • 9:30 Canadian Manufacturing PMI
  • 9:45 US Final Manufacturing PMI. Estimate 55.9
  • 10:00 US ISM Manufacturing PMI. Estimate 59.0
  • 10:00 US Construction Spending. Estimate 0.2%
  • 10:00 US ISM Manufacturing Prices. Estimate 67.5
  • 10:30 US Natural Gas Storage. Estimate 53B
  • All Day – US Total Vehicle Sales. Estimate 17.1M

Friday (November 2)

  • 8:30 Canadian Employment Change. Estimate 12.7K
  • 8:30  Canadian Unemployment Rate. Estimate 5.9%
  • 8:30 Canadian Trade Balance. Estimate 0.2B
  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 193K
  • 8:30 US Unemployment Rate. Estimate 3.7%

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, November 1, 2018

USD/CAD, November 1 at 8:20 DST

Open: 1.3157 High: 1.3169 Low: 1.3091 Close: 1.3092

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2733 12831 1.2970 1.3099 1.3198 1.3292

In the Asian session, USD/CAD edged lower. This trend has continued in European trade

  • 1.2970 is providing support
  • 1.3099 has switched to a resistance role after losses by USD/CAD on Thursday. It is a weak line
  • Current range: 1.2970 to 1.3099

Further levels in both directions:

  • Below: 1.2970, 1.2831 and 1.2733
  • Above: 1.3099, 1.3198, 1.3292 and 1.3383

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.