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USD/CAD: Soft Canadian Dollar Above 1.33, U.S. Consumer Confidence Next

USD/CAD: Soft Canadian Dollar Above 1.33, U.S. Consumer Confidence Next

USD/CAD has posted slight losses in the Tuesday session, as the pair trades slightly above the 1.33 line. On the release front, today’s highlight in the US is CB Consumer Confidence, with the indicator expected to drop to 101.5 points. There are no Canadian releases on Tuesday. On Wednesday, the US releases New Home Sales.

The Canadian dollar is struggling, losing 1.7% late last week. This followed the Bank of Canada’s rate decision to maintain its benchmark rate at 0.50%, where it has been pegged since July 2015. The bank downgraded forecasts for economic growth, projecting GDP to grow 1.1 percent in 2016, down from its forecast of 1.3 percent in July. For 2017, growth is expected at 2.0 percent, down from 2.2 percent in July.

The bank stated that the lower forecasts were a result of weaker housing demand and lower export forecasts. On Monday, the Canadian government and the BoC renewed the inflation target target of 2 percent until 2021.

With the US labor market close to capacity, jobless claims surprised the markets by climbing to 260 thousand, higher than expected. This marked the first reading since August that the key indicator has not beaten the estimate. Still, the dollar didn’t lose any ground, as the 4-week daily average of jobless claims remains excellent. There was good news from the manufacturing front, as the Philly Fed Manufacturing Index posted a strong gain of 9.7 points, easily beating the forecast of 5.2 points.

On the inflation front, US consumer inflation numbers were a mixed bag. CPI edged up to 0.3%, up from 0.2% a month earlier. This was the strongest gain since April. Core CPI went the opposite direction, slipping to 0.1%, down from 0.3% a month earlier. These numbers could have an important bearing on the Fed’s interest rate decision in December. Currently, a December rate hike is currently priced in at 68 percent, as market sentiment remains high that the Fed will press the rate trigger before the end of the year.

USD/CAD Fundamentals

Tuesday (October 25)

  • 9:00 US HPI. Estimate 0.5%
  • 10:00 US S&P/CS Composite-20 HPI. Estimate 5.1%
  • 10:00 US CB Consumer Confidence. Estimate 101.5
  • 10:00 IBF/TIPP Economic Optimism. Estimate 47.6
  • 10:00 US Richmond Manufacturing Index. Estimate -5 points

Wednesday (October 26)

  • 10:00 US New Home Sales. Estimate 601K

*All release times are EDT

*Key events are in bold

USD/CAD for Tuesday, October 25, 2016

USD/CAD Oct 24 – 26 Chart

USD/CAD October 25 at 7:50 GMT

Open: 1.3348 High: 1.3335 Low: 1.3308 Close: 1.3310

USD/CAD Technical

  • USD/CAD has posted slight losses in the Asian and European sessions
  • 1.3253 is providing support
  • There is resistance at 1.3371

Further levels in both directions:

  • Below: 1.3253, 1.3120, 1.3028 and 1.2922
  • Above: 1.3371, 1.3457 and 1.3587
  • Current range: 1.3371 to 1.3457

OANDA’s Open Positions Ratio

USD/CAD ratio is showing short positions with a majority (67%), indicative of trader bias towards USD/CAD continuing to move to lower ground.

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