The Canadian dollar is unchanged in the Thursday session. In North American trade, USD/CAD is trading at 1.3230. On the release front, US unemployment claims matched the estimate, dropping to 258 thousand. In Canada, Building Permits sparkled with a gain of 8.7%, crushing the forecast of 1.6%. Housing Starts dipped to 184 thousand, shy of the forecast of 191 thousand. On Friday, the US releases UoM Consumer Sentiment Index.
As expected, the Bank of Canada stayed on the sidelines and left the benchmark rate at 0.50%. The Canadian dollar, which is sensitive to oil prices, was buoyed by the unexpected OPEC production agreement, which triggered a surge in crude prices. The improvement in the Canadian dollar eased pressure on the BoC to lower rates. The BoC had predicted third quarter growth of 3.2%, but the economy beat this projection, expanding at a clip of 3.5%.
The Federal Reserve meets next week for its monthly policy meeting, the first after Donald Trump’s election as president. The markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and market anticipation of a hike has translated into strong gains for the greenback.
It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has stated that he plans to increase government spending and cut taxes, which could lead to higher inflation levels. The Fed has indicated that it plans to raise rates gradually in 2017, but this could change once the new administration’s economic policies become clearer.
USD/CAD Fundamentals
Thursday (December 8)
- 13:13 Canadian Housing Starts. Estimate 191K. Actual 184K
- 13:30 Canadian Building Permits. Estimate 1.6%. Actual 8.7%
- 13:30 Canadian NHPI. Estimate 0.2%. Actual 0.4%
- 13:30 Canadian Capacity Utilization Rate. Estimate 81.6%. Actual 81.9%
- 13:30 US Unemployment Claims. Estimate 258K. Actual 258K
- 15:30 US Natural Gas Storage Estimate -44B
Friday (December 9)
- 15:00 US Preliminary UoM Consumer Sentiment. Estimate 94.3
*All release times are EST
*Key events are in bold
USD/CAD for Thursday, December 8, 2016
USD/CAD December 8 at 8:45 EST
Open: 1.3225 High: 1.3231 Low: 1.3198 Close: 1.3218
USD/CAD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.2951 | 1.3026 | 1.3120 | 1.3253 | 1.3371 | 1.3457 |
- USD/CAD showed limited movement in the Asian and European sessions. The pair has posted slight gains early in the North American session
- 1.3120 is providing strong support
- 1.3253 switched to a resistance line after losses by USD/CAD in the Wednesday session
Further levels in both directions:
- Below: 1.3120, 1.3026 and 1.2951
- Above: 1.3253, 1.3371, 1.3457 and 1.3551
- Current range: 1.3120 to 1.3253
OANDA’s Open Positions Ratio
USD/CAD ratio is showing some movement towards long positions. Currently, long positions have a slender majority (53%), indicative of trader bias towards USD/CAD reversing directions and moving higher.