The Canadian dollar has jumped to a two-week high in the Monday session. Currently, USD/CAD is trading at 1.3175, down 0.88% on the day. On the release front, the key U.S. indicator is ISM Manufacturing PMI, which is expected to edge lower to 57.5 points. Canada will also release Manufacturing PMI. On Tuesday, Canada publishes Labor Productivity, which is forecast to dip to 0.4%.
Canada’s GDP declined 0.2% in September, marking the first month the economy has contracted since January. This fell short of the estimate of 0.1%. The decline was attributed to weaker motor vehicle purchases and a softer housing market. The Bank of Canada is keeping a close eye on the strength of the economy, and the markets are predicting that the BoC will not raise interest rates at the policy meeting on Dec. 5. As well, falling oil prices is another factor in favor of the BoC not taking any action.
Investor risk appetite has jumped on Monday, and that has translated into strong gains for minor currencies like the Canadian dollar. On Monday, the currency improved to its highest level since Nov. 20. The catalyst for the boost was the meeting between U.S. President Donald Trump and Chinese President Xi Jinping on the sidelines of the G-20 summit. Just last week, Trump had threatened to raise tariffs on $200 billion in Chinese products from 10 percent to 25 percent on Jan. 1. However, the tone was optimistic after the meeting, with China receiving a short reprieve. The sides have agreed to continue talks for another 90 days, and the U.S. tariffs will take effect if no agreement is reached. The markets were clearly relieved that the tariff war has de-escalated, and European markets have jumped on Monday, following the lead of Asian markets. At the same time, the U.S. and China remain far apart on resolving the trade war, and the greenback will likely reverse directions unless the parties make substantial progress in the trade dispute, which has shaken the markets and threatens to derail global growth.
- Tuesday (December 4)
- 9:30 Canadian Labor Productivity. Estimate 0.4%
USD/CAD for Monday, December 3, 2018
USD/CAD, December 3 at 8:40 EST
Open: 1.3291 High: 1.3291 Low: 1.3161 Close: 1.3175
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2888 | 1.2970 | 1.3099 | 1.3198 | 1.3292 | 1.3383 |
USD/CAD posted considerable losses in the Asian session and has posted small losses in European trade
- 1.3099 is providing support
- 1.3198 is the next resistance line
- Current range: 1.3099 to 1.3198
Further levels in both directions:
- Below: 1.3099, 1.2970 and 1.2888
- Above: 1.3198, 1.3292, 1.3383 and 1.3461
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