USD/CAD – Canadian manufacturing sparkles, but loonie shrugs

The Canadian dollar is almost unchanged in the Friday session, after slight losses on Thursday. Early in the North American trade, the pair is trading at 1.3343, up 0.06% on the day. Canadian manufacturing sales surprised with a sharp gain of 1.0%, well above the estimate of 0.4%. In the U.S., the Empire State Manufacturing Index slowed to 3.7, compared to the forecast of 10.1 points. This marked the weakest gain since May 2017. Later in the day, UoM Consumer Sentiment is projected to remain at 95.5 points.

The Bank of Canada has eased up on rate policy in 2019. The BoC raised rates five times between July 2017 and October 2018, but has since stayed on the sidelines. With the Canadian economy in a slowdown, the bank could stay on the sidelines until the second half of 2019. Was the sharp jump in rates too much for the economy to handle? One sore spot is the housing sector, which has declined for five straight months, as higher rates have made mortgages more expensive and reduced home purchases. If the economy does not rebound, policymakers will have to consider a rate cut, which could stimulate economic activity but would be bearish for the Canadian dollar.

Investors are keeping an eye on developments in the U.S.-China trade war. After four rounds of negotiations, the markets were hoping that President Trump and Chinese President Xi might hold a summit in late March. However, it was reported on Wednesday that the two leaders will not meet before April. This has raised concerns that the sides have not managed to resolve their differences. Trump has said that he is not in a rush to reach an agreement, but a deal with China would be a huge victory for Trump ahead of the U.S. election in 2020. If there are further signs that an agreement between the U.S. and China remains elusive, investors could become nervous and risk averse, which could send the Canadian dollar downwards.

I’ll take one centimetre of snow at Heathrow please

USD/CAD Fundamentals

Friday (March 15)

  • 8:30 Canadian Manufacturing Sales. Estimate 0.4%. Actual 1.0%
  • 8:30 US Empire State Manufacturing Index. Estimate 10.1. Actual 3.7
  •  10:00 US Preliminary UoM Consumer Sentiment. Estimate 95.5
  • 10:00 US JOLTS Openings. Estimate 7.27M

*All release times are DST

*Key events are in bold

USD/CAD for Friday, March 15, 2019

USD/CAD, March 15 at 8:50 EST

Open: 1.3334 High: 1.3344 Low: 1.3290 Close: 1.3343

USD/CAD Technical

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

USD/CAD posted slight losses in the Asian session but has recovered in European trade. The pair is steady early in North American trade

  • 1.3290 is providing support
  • 1.3383 is the next resistance line
  • Current range: 1.3290 to 1.3383

Further levels in both directions:

  • Below: 1.3290, 1.3200 and 1.3125
  • Above: 1.3383, 1.3445, 1.3552 and 1.3662

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.
Kenny Fisher

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