USD/CAD: Canadian Dollar Inches Upwards
Kenny Fisher | Jan 10, 2018 10:46
USD/CAD continues to move sideways this week. In the Wednesday session, the pair is trading at 1.2447, down 0.14% on the day. On the release front, Canada releases Building Permits, a major construction indicator. The markets are braced for a decline of 0.7%. In the U.S., today’s key event is Import Prices, with an estimate of 0.4%.
The Canadian dollar made up some ground against the greenback in December, and the currency hasn’t missed a beat in January, with gains of 1.2% percent. Recent economic indicators have pointed upwards, led by excellent employment numbers. In December, the economy added 78.600 jobs, defying experts who predicted a minuscule gain of 1,800. This release comes on the heels of a superb November release, when the economy added 79,500 news jobs. The unemployment rate dropped to 5.7% in December, down from 5.9% a month earlier. Last week marked a third winning week for the rejuvenated Canadian dollar, and on Friday the currency hits its highest level against the U.S. dollar since late September.
Another factor that has boosted the Canadian dollar has been the recent rise in oil, which has jumped 6.8% since mid-December. Geopolitical tensions have boosted oil prices, in particular tensions with North Korea and the recent civil unrest in Iran. Still, there is pressure on the Bank of Canada to raise its benchmark rate of 1.0%, which is lagging behind the Federal Reserve rate of between 1.25%-1.50%. With the Fed widely expected raise rates in January, the recent gains by the Canadian dollar could evaporate if the BoC doesn’t raise rates at its policy meeting on Jan. 17. However, the BoC has voiced concerns about the Canadian economy, and as things stand, the BoC is not planning to raise rates. This could mean a rough ride for the Canadian currency next week.
Interest rates may be in the headlines, but another important parameter is the Federal Reserve’s balance sheet. As of this month, the Fed has started to shrink its massive balance sheet of $4.4 trillion. The balance sheet ballooned during the financial crisis of 2008-2009, and good times have allowed the Fed to begin trimming its portfolio. Incoming Fed Chair Jerome Powell, who takes over in February, has estimated that the balance sheet could drop to anywhere between $2.4 trillion to $2.9 trillion after several years of cuts. Fed policymakers have not indicated a magic number for the balance sheet, but the cuts indicate a vote of confidence in the U.S. economy.
USD/CAD Fundamentals
Wednesday (Jan. 10)
- 8:30 Canadian Building Permits. Estimate -0.7%
- 8:30 US Import Prices. Estimate 0.4%
- 10:00 US Final Wholesale Inventories. Estimate 0.7%
- 10:30 US Crude Oil Inventories. Estimate -3.9M
- 13:01 US 10-year Bond Auction
Get The App
Thursday (Jan. 11)
- 8:30 Canadian NHPI. Estimate 0.2%
- 8:30 US PPI. Estimate 0.2%
- 8:30 US Core PPI. Estimate 0.2%
- 8:30 US Unemployment Claims. Estimate 246K
*All release times are GMT
*Key events are in bold
USD/CAD for Wednesday, Jan. 10, 2018
USD/CAD, Jan. 10 at 7:55 EDT
Open: 1.2464 High: 1.2476 Low: 1.2327 Close: 1.2447
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2060 | 1.2190 | 1.2351 | 1.2494 | 1.2630 | 1.2757 |
USD/CAD edged higher in the Asian session but has given up most of the gains in European trade
- 1.2351 is providing support
- 1.2494 is the next resistance line
- Current range: 1.2351 to 1.2494
Further levels in both directions:
- Below: 1.2351, 1.2190 and 1.2060
- Above: 1.2494, 1.2630, 1.2757 and 1.2860
OANDA’s Open Positions Ratio
USD/CAD ratio has shown little movement this week. Currently, long positions have a majority (60%), indicative of trader bias towards USD/CAD reversing directions and moving to higher ground.
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.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.