USD/CAD – Canadian dollar edges higher, U.S. manufacturing report beats estimate

USD/CAD is slightly lower at the start of the week. Currently, the pair is trading at 1.3302, down 0.18% on the day. In the U.S., the Empire State Manufacturing Index improved to 10.1, beating the estimate of 8.1 points. Later in the day, Canada releases the BoC Business Outlook Survey. This indicator provides a snapshot of business sentiment, and should be treated as a market-mover. On Tuesday, Canada releases manufacturing sales, which is expected to decline by 0.1% in February, after a strong gain of 1.0% in January.

The Bank of Canada remains in dovish mode and may freeze rate hikes until 2020. The lack of activity from the BoC could weigh on the Canadian dollar, as the prospect of higher rates would make the Canadian currency more attractive to investors. Last week, the IMF downgraded economic forecasts worldwide, and Canada was no exception. The IMF lowered its forecast for the Canadian growth from 1.9% to 1.5%. The report noted that Canada would be a major beneficiary if the U.S and China can hammer out a deal and end their bruising trade war. The IMF also lowered its forecast for global growth, from 3.5% to 3.3%.

There was positive news on the U.S. inflation front last week, as key indicators headed higher in March. CPI, the key gauge of consumer spending, climbed to 0.4%, its highest gain since January 2018. The producer price index also looked strong, climbing 0.6%, a 5-month high. Inflation remains well below the Federal Reserve target of 2.0%, but stronger inflation numbers will bolster the case of Fed officials who favor raising rates in 2019 if the economic outlook improves. The Fed minutes from the March meeting left the door open to further rate hikes this year, but current market pricing suggests no hikes until 2020, and some analysts are expecting a cut in rates later this year.

USD/JPY hits six-week high as positive vibes continue

USD/CAD Fundamentals

Monday (April 15)

  • 8:30 US FOMC Member Evans Speaks
  • 8:30 US Empire State Manufacturing Index. Estimate 8.1. Actual 10.1
  • 10:30 BOC Business Outlook Survey
  • 13:00 US FOMC Member Evans Speaks
  • 16:00 US TIC Long-Term Purchases
  • 20:00 US FOMC Member Rosengren Speaks

Tuesday (April 16)

  • 8:30 Canadian Manufacturing Sales. Estimate -0.1%
  • 9:15 US Capacity Utilization Rate. Estimate 79.2%
  • 9:15 US Industrial Production. Estimate 0.2%
  • 10:00 US NAHB Housing Market Index. Estimate 63

*All release times are DST

*Key events are in bold

USD/CAD for Monday, April 15, 2019

USD/CAD, April 15 at 8:15 DST

Open: 1.3326 High: 1.3341 Low: 1.3300 Close: 1.3302

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. In European trade, the pair posted small gains but then retracted

  • 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 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

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.