USD/CAD – Canadian dollar subdued ahead of US congressional elections

The Canadian dollar remains close to the 1.31 level. In the Tuesday session, USD/CAD is trading at 1.3121, down 0.08% on the day. On the release front, Canadian Building Permits is expected to tick lower to 0.3%. In the U.S, voter participation is expected to be heavy in the midterm congressional elections. As well, the U.S. releases JOLTS Jobs Openings. On Wednesday, Canada releases Ivey PMI.

All eyes are on the U.S mid-term elections, with voters deciding who will control Congress. Many analysts are calling the election a referendum on the presidency of Donald Trump, who has presided over a red-hot economy but has also alienated many voters with his controversial policies on health care and immigration. There are a host of races that are too close to call, but most analysts expect the Democrats to narrowly win the House while the Republicans will hold onto their majority in the Senate. Traders should expect some volatility in the currency markets once the results are announced.

Canada released October employment data on Friday, and the releases were positive. The economy added 11.2 thousand jobs in October, although this was shy of the estimate 12.7 thousand. The unemployment rate ticked lower to 5.8%, a shade better than the forecast of 5.9%. These numbers will likely increase the likelihood of a rate hike from the Bank of Canada in early December. The economy is doing well and 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.

OANDA European open – US midterms drive caution

Election time

USD/CAD Fundamentals

Tuesday (November 6)

  • 9:30 Canadian Building Permits. Estimate 0.3%
  • 10:00 US JOLTS Job Openings
  • Tentative – USD IBD/TIPP  Economic Optimism. Estimate 59.2
  • All Day  – US Congressional Elections
  • 13:01 US 10-year Bond Auction

Wednesday (November 7)

  • 10:00 Canadian Ivey PMI. Estimate 50.9

*All release times are EST

*Key events are in bold

USD/CAD for Tuesday, November 6, 2018

USD/CAD, November 6 at 7:20 DST

Open: 1.3110 High: 1.3132 Low: 1.3102 Close: 1.3121

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2831 12970 1.3099 1.3198 1.3292 1.3383

USD/CAD has showed little movement in the Asian and European sessions

  • 1.3099 is a weak support level.
  • 1.3198 is the next resistance line.
  • Current range: 1.3099 to 1.3198

Further levels in both directions:

  • Below: 1.3099, 1.2970, 1.2831 and 1.2733
  • Above: 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.