USD/CAD starts week with strong gains

USD/CAD has posted considerable gains on Monday. In the North American session, the pair is trading at 1.3213, up 0.67% on the day. On the fundamentals front, US New Home Sales slipped to 959 thousand, down from 1.01 million. This reading fell shy of the forecast of 1.025 million. There are no Canadian releases on the schedule. On Tuesday, we’ll get a look at US durable goods orders, as well as consumer confidence.

US PMIs point to expansion

On Friday, the US released PMIs for September, which are important gauges of the services and manufacturing sectors. The Services PMI rose to 56.0, up from 54.6 beforehand. This was the highest level since February 2019. The Manufacturing PMI stayed close to the 53-level for a third straight month, with a reading of 53.3 points. Both readings were above the 50-level, which separates contraction from expansion.

 

Deadlock over US stimulus deal

Talks continue over the US stimulus package, with the US election just over a week away. Although progress has been made in the talks, the likelihood of a deal between the Democrats and Republicans remains slim. A stimulus agreement would be a coup for President Trump, especially as he faces an uphill election battle against Joe Biden. However, the Republican-controlled Senate appears unwilling to sign onto an agreement, since many Republican senators have their own elections to contend with, and a huge spending package will be anathema to most Republican voters. The financial markets appear to have priced in a no-deal scenario prior to the election, but that doesn’t preclude volatility for the US dollar in the days before the election.

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USD/CAD Technical

  • There is support at 1.3165, followed by support at 1.3105
  • USD/CAD has broken above resistance at 1.3208. Above, there is resistance at 1.3319
  • The pair is putting pressure on the 20-day MA line. If the pair breaks above this line, it would signal an upward trend

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.
Kenny Fisher

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