USD/CAD is slightly lower on Tuesday, continuing the downward trend which marked the Monday session. Currently, the pair is trading at 1.3070. On the release front, Canada releases GDP, with the estimate standing at 0.3%. In the US, today’s key event is CB Consumer Confidence, with the markets expecting a strong reading of 112.6 points.
All eyes are on Canadian GDP, which will be released later on Tuesday. In October, GDP declined 0.3%, missing the estimate of a 0.1% gain. This marked the first decline since May and has raised concerns that economic growth in the fourth quarter will be weak. If GDP again misses expectations, we could see the Canadian dollar lose ground, and the BoC will be under increased pressure to lower interest rates. Earlier in January, the bank held rates at 0.50% but expressed concerns of economic turbulence due to Donald Trump’s protectionist stance, which could have significant repercussions for the Canadian economy.
The markets had predicted that US economic growth would soften in the fourth quarter, and Advance GDP fell short of the estimate. The economy expanded 1.9%, shy of the estimate of 2.1%. Business investment and consumer spending remains solid and should continue into 2017. However, Trump’s protectionist rhetoric and action, which saw tensions escalate with Mexico last week, could cloud the bright picture for the US economy.
Donald Trump has barely warmed the president’s chair in the Oval Office, but has already signed a host of controversial executive orders which have been condemned both domestically and abroad. Trump has withdrawn from the Trans-Pacific Partnership and declared he will reopen the NAFTA trade agreement with Canada and Mexico. He has also ordered work to begin on a wall with Mexico and banned immigrants from seven Muslim countries.
Trump’s unconventional and disjointed approach to international politics and trade could have major ramifications on global trade and could lead to financial instability in global markets, triggering volatility in the currency markets. Just a few days before being sworn in as president, Trump stated that the US dollar was “too strong”, blaming a weak Chinese currency. Predictably, the greenback lost ground after Trump’s remarks. It’s a safe bet that Trump’s offhand tweets and comments will continue to fuel market movement.
Geopolitical and Trade Risks Dominate Market Moves
Fed Expected to Keep Rates on Hold Awaiting Trump Plan
USD/CAD Fundamentals
Tuesday (January 31)
- 8:30 Canadian GDP. Estimate 0.3%
- 8:30 Canadian RMPI. Estimate 2.9%
- 8:30 Canadian IPPI. Estimate IPPI. Estimate 0.5%.
- 9:00 US S&P/CS Composite-20 HPI. Estimate 5.0%
- 9:45 US Chicago PMI. Estimate 55.1
- 10:00 US CB Consumer Confidence. Estimate 112.6
Upcoming Key Releases
Wednesday (February 1)
- 8:15 US ADP Nonfarm Employment Change. Estimate 165K
- 10:00 US ISM Manufacturing PMI. Estimate 55.0
- 14:00 US FOMC Statement
- 14:00 US Federal Funds Rates. Estimate
*All release times are GMT
*Key events are in bold
USD/CAD for Tuesday, January 31, 2017
USD/CAD January 31 at 8:00 EST
Open: 1.3102 High: 1.3123 Low: 1.3057 Close: 1.3067
USD/CAD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.2815 | 1.2922 | 1.3003 | 1.3120 | 1.3253 | 1.3371 |
- USD/CAD was flat in the Asian session posted slight losses in European trade
- 1.3003 is providing support
- 1.3120 is the next resistance line
Further levels in both directions:
- Below: 1.3003, 1.2922 and 1.2815
- Above: 1.3120, 1.3253, 1.3371 and 1.3457
- Current range: 1.3003 to 1.3120
OANDA’s Open Positions Ratio
USD/CAD ratio is unchanged in the Tuesday session. Currently, long positions command a strong majority (61%), indicative of trader bias towards USD/CAD reversing directions and moving upwards.