The Canadian dollar has started the week with losses. In Monday’s European session, USD/CAD is trading at 1.2532, up 0.57% on the day. On the release front, there are no major events to start the week. Canada releases Foreign Securities Purchases and the U.S. publishes the Empire State Manufacturing Index.
Although the U.S. economy has been performing well and the labor market remains red-hot, inflation numbers remain soft. There was some disappointment in the markets as September CPI and Core CPI narrowly missed their estimates. On the release front, CPI gained 0.5%, short of the estimate of 0.6%. Core CPI posted a small gain of 0.1%, shy of the forecast of 0.2%. With inflation an important consideration in future rate decisions by the Federal Reserve, investors will be anxiously monitoring how Fed policymakers respond to September’s soft inflation numbers. Also on Friday, U.S. retail sales data was a mix. Core Retail Sales gained 1.0%, above the estimate of 0.9%. However, retail sales were up 1.6%, short of the forecast of 1.7%.
On Monday, the Iraqi army attacked Kurdish forces clashed near the city of Kirkuk, as the Iraqi government is trying to re-establish control over the oil-rich region. The situation has escalated since the September Kurdish referendum on independence, in which voters overwhelmingly voted in favor of independence. If the Iraqi action becomes a full-blown offensive, oil prices could continue to climb, which could boost the Canadian dollar.
U.S. President Donald Trump’s protectionist stance could spell trouble for Canada and Mexico. Trump has declared that the NAFTA agreement has been terrible for the U.S. and has vowed to renegotiate the pact. Canadian Prime Minister Justin Trudeau has said that he’s looking for a “win-win” scenario for all three countries, but the talks over re-negotiating NAFTA have not gone well, and Trump has previously declared that he could scrap the deal and simply enter a new trade agreement with Canada. One of the key U.S. demands that Canada is not happy with is a “sunset clause,” which would require new negotiations every five years. The lack of progress in the talks has sent the Mexican peso lower, and if the negotiations grind to a halt, the Canadian dollar could also lose ground.
USD/CAD Fundamentals
Monday (October 16)
- 8:30 Canadian Foreign Securities Purchases. Estimate 20.05B
- 8:30 US Empire State Manufacturing Index. Estimate 20.3
- 10:30 US BoC Business Outlook Survey
- Tentative – US Federal Budget Balance. Estimate -1.0B
*All release times are GMT
USD/CAD Monday, October 16 at 8:00 EDT
Open: 1.2468 High: 1.2544 Low: 1.2468 Close: 1.2533
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 . | R3 |
| 1.2218 | 1.2302 | 1.2459 | 1.2598 | 1.2701 | 1.2778 |
USD/CAD has edged higher in the Asian and European sessions
- 1.2459 is providing support
- 1.2598 is the next resistance line
- Current range: 1.2459 to 1.2598
Further levels in both directions:
- Below: 1.2459, 1.2302 and 1.2218
- Above: 1.2598, 1.2701 and 1.2778
OANDA’s Open Positions Ratio
In the Monday session, USD/CAD ratio is showing long positions with a majority (58%). This is indicative of trader bias towards USD/CAD continuing to move to higher ground.
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