USD/CAD – Canadian dollar under pressure as GDP points south

The Canadian dollar has steadied in the Monday session, after sharp losses on Friday. Currently, the pair is trading at 1.3306, up 0.07% on the day. It’s a quiet start to the week, with no Canadian events and one minor event in the United States. On Tuesday, the U.S. releases ISM Non-Manufacturing PMI.

The Canadian dollar slipped almost 1 percent on Friday, after a soft GDP report. In December, the economy contracted by 0.1% for a second straight month. The economy was stagnant in Q4, with a negligible gain of 0.1%. For all of 2018, the economy expanded 1.8%, shy of the BoC target of 2.0%. The Bank of Canada has said that it expected the economic slowdown to be temporary, but a sluggish Q4 is raising concerns about the health of the economy. The BoC hiked rates three times last year, and this may have hurt consumer spending, which was weak in the fourth quarter. With economic growth headed in the wrong direction and inflation levels below the BoC target of 2.0%, policymakers are unlikely to raise interest rates in the near term.

In the U.S., Friday’s numbers were a disappointment. Personal Spending declined 0.5%, its first decline in almost three years. The ISM Manufacturing PMI fell to 54.2, short of the estimate of 55.6 points. As well, UoM consumer sentiment improved to 93.8, but still missed the forecast of 95.8 points. The focus will be on employment numbers this week, starting with ADP nonfarm payrolls on Wednesday.

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USD/CAD Fundamentals

Monday (March 4)

  • 10:00 U.S. Construction Spending. Estimate 0.2%

Tuesday (March 5)

  • 10:00 US ISM Non-Manufacturing PMI. Estimate 57.4

*All release times are EST

*Key events are in bold

USD/CAD for Monday, March 4, 2019

USD/CAD, March 4 at 8:45 EST

Open: 1.3297 High: 1.3324 Low: 1.3275 Close: 1.3307

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.3125 1.3200 1.3290 1.3383 1.3445 1.3552

USD/CAD was flat for most of the Asian session and has ticked higher in European trade

  • 1.3290 is a weak support level
  • 1.3383 is the next resistance line
  • Current range: 1.3290 to 1.3383

Further levels in both directions:

  • Below: 1.3290, 1.3200, 1.3125 and 1.3049
  • Above: 1.3383, 1.3445 and 1.3552

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 Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.