USD/CAD continues to trade sideways this week. In the Tuesday session, the pair is trading at 1.2441, up 0.09% on the day. It’s a quiet day on the release front, with no Canadian events. In the U.S., the sole indicator is the Empire State Manufacturing Index. The indicator is expected to climb to 18.4 points.
All eyes are on the Bank of Canada, which holds its monthly policy meeting on Wednesday. Most experts expect the BoC to raise rates by a quarter-point, from 1.0% – 1.25%. The last time the benchmark rate was above 1.0% was back in December 2008. The Canadian economy has looked strong of late, underscored by unexpectedly strong employment data. At the same time, BoC Governor Stephen Poloz has some concerns about the economy, particularly looming dark clouds over NAFTA. The free-trade agreement, crucial to the Canadian economy, is in trouble, as U.S. President Donald Trump has threatened to cancel the pact unless Mexico and Canada make major concessions to the U.S. If the agreement is terminated, the Canadian dollar would likely take a tumble.
The Canadian dollar held recorded strong gains in December, and has held its own against the greenback in January. There are two important factors for this positive trend. First, Canada recorded outstanding employment numbers in the past two months. 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. Second, the recent rise in oil prices, which are up 6.7% since Dec. 1, has boosted the commodity-based Canadian currency.
Dovish BoC Remains a Risk Ahead of Rate Decision
Tuesday (Jan. 16)
- 8:30 US Empire State Manufacturing Index. Estimate 18.5
Wednesday (Jan. 17)
- 9:15 US Capacity Utilization Rate. Estimate 77.3%
- 9:15 US Industrial Production. Estimate 0.3%
- 10:00 BoC Monetary Policy Report
- 10:00 BoC Rate Statement
- 10:00 BoC Overnight Rate. Estimate 1.25%
- 11:15 BoC Press Conference
*All release times are GMT
*Key events are in bold
USD/CAD for Tuesday, Jan. 16, 2018
USD/CAD, Jan. 16 at 7:45 EDT
Open: 1.2429 High: 1.2452 Low: 1.2418 Close: 1.2441
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2060 | 1.2190 | 1.2351 | 1.2494 | 1.2630 | 1.2757 |
USD/CAD was flat in the Asian session. In European trade, the pair edged higher but has retracted
- 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 is almost unchanged in the Tuesday session. Currently, long positions have a majority (56%), indicative of trader bias towards USD/CAD continuing to move 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.