USD/CAD – Canadian dollar moves higher as investor confidence improves

The Canadian dollar has gained ground in the Thursday session. Currently, USD/CAD is trading at 1.3092, down 0.49% on the day. On the release front, U.S, unemployment claims are expected to edge lower to 213 thousand. The ISM Manufacturing PMI is forecast to drop for a second straight month, with an estimate of 59.0 points. On Friday, traders should be prepared for volatility from USD/CAD, with key employment releases on both sides of the border.

The Canadian economy grew 0.1% in August, marking a seventh straight month of expansion. Higher oil production in Alberta and higher oil prices fueled the modest gain. The economy has been performing well and remains on track for annualized growth of 2% in 2018. Unemployment is at low levels and is expected to remain pegged at 5.9% for October. The Bank of Canada raised rates last week to 1.75%, and the hawkish message from the bank was a broad hint to the markets that further rate hikes are in store. With the economy operating close to full capacity, rate hikes are an effective method of ensuring that the economy does not overheat. 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.

Pound soars on Brexit progress reports

USD/CAD Fundamentals

Thursday (November 1)

  • 7:30 US Challenger Job Cuts. Actual 153.6%
  • 8:30 US Preliminary Productivity. Estimate 2.2%
  • 8:30 US Preliminary Unit Labor Costs. Estimate 1.1%
  • 8:30 US Unemployment Claims. Estimate 213K
  • 9:30 Canadian Manufacturing PMI
  • 9:45 US Final Manufacturing PMI. Estimate 55.9
  • 10:00 US ISM Manufacturing PMI. Estimate 59.0
  • 10:00 US Construction Spending. Estimate 0.2%
  • 10:00 US ISM Manufacturing Prices. Estimate 67.5
  • 10:30 US Natural Gas Storage. Estimate 53B
  • All Day – US Total Vehicle Sales. Estimate 17.1M

Friday (November 2)

  • 8:30 Canadian Employment Change. Estimate 12.7K
  • 8:30  Canadian Unemployment Rate. Estimate 5.9%
  • 8:30 Canadian Trade Balance. Estimate 0.2B
  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 193K
  • 8:30 US Unemployment Rate. Estimate 3.7%

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, November 1, 2018

USD/CAD, November 1 at 8:20 DST

Open: 1.3157 High: 1.3169 Low: 1.3091 Close: 1.3092

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2733 12831 1.2970 1.3099 1.3198 1.3292

In the Asian session, USD/CAD edged lower. This trend has continued in European trade

  • 1.2970 is providing support
  • 1.3099 has switched to a resistance role after losses by USD/CAD on Thursday. It is a weak line
  • Current range: 1.2970 to 1.3099

Further levels in both directions:

  • Below: 1.2970, 1.2831 and 1.2733
  • Above: 1.3099, 1.3198, 1.3292 and 1.3383

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.