USD/CAD – Trump Shock Pushes Canadian Dollar to 8-month Low

The Canadian dollar remains under pressure on Friday, as USD/CAD continues to post gains this week. In the North American session, USD/CAD is trading at the 1.35 line. On the release front, there are no Canadian events on the schedule. In the US, today’s highlight is UoM Consumer Sentiment. The indicator is expected to edge lower to 87.4 points.

The markets went on a wild roller-coaster ride on Wednesday, following the stunning news that Donald Trump had won the US presidential election. Political convention was sent on its head, as most pundits had predicted that Hillary Clinton would win the White House. Trump’s election victory which has already been labeled the most stunning win in US election history, sent shock waves across global markets to an extent not seen since the Brexit vote in June. The volatility hasn’t helped the struggling Canadian dollar, which is down 1.0% this week. Currently, USD/CAD is at its highest level since late February.

As the dust begins to settle after a stunning week, what can the markets expect from President Trump? Like much of his agenda, Trump’s economic platform is unclear. According to Bank of America Merrill Lynch, given that both houses of Congress are under Republican control, Trump could implement steps to loosen fiscal policy. This would lead to greater spending, causing more inflation. In turn, interest rates would move higher and bolster the US dollar. However, Trump remains an enigma, having never held public office. His ideology is unclear (if he has one), so the markets could be in for a period of uncertainty, at least in the early stages of the Trump administration. This could lead to prolonged volatility in the currency markets. As far as monetary policy is concerned, the odds of a rate hike in December also showed some volatility immediately after the election, but are back at 71 percent, identical to the odds just before the Trump victory.

USD/CAD Fundamentals

Friday (November 11)

• 9:00 US FOMC Member Stanley Fischer Speaks
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 87.4
• 10:00 US Preliminary UoM Inflation Expectations

*All release times are EDT

*Key events are in bold

USD/CAD for Friday, November 11, 2016

USD/CAD November 11 at 8:20 GMT

Open: 1.3472 High: 1.3542 Low: 1.3455 Close: 1.3500

USD/CAD Technical

• USD/CAD has been marked by choppy trading in the Asian session
• 1.3457 is providing support
• There is resistance at 1.3551

Further levels in both directions:

• Below: 1.3457, 1.3371, 1.3253 and 1.3120
• Above: 1.3551, 1.3648 and 1.3782
• Current range: 1.3457 to 1.3551

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Friday session. Currently, short positions command a strong majority (68%), indicative of trader bias towards USD/CAD reversing directions and moving to lower ground.

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