USD/CAD – Canadian dollar trading sideways as manufacturing sales within expectations

The Canadian dollar has steadied in the Thursday session, after considerable losses on Wednesday. Currently, USD/CAD is trading at 1.3143, up 0.02% on the day. On the release front, Canadian Manufacturing Sales softened to 1.1%, edging above the estimate of 1.0%. Canadian ADP Nonfarm Employment Change rebounded with a gain of 11.6 thousand. In the U.S, construction numbers were mixed. Building Permits improved to 1.31 million, matching the estimate. Housing starts remained at 1.17 million, short of the estimate of 1.27 million. The Philly Manufacturing Index dropped sharply to 11.9, missing the estimate of 21.9 points. Unemployment claims edged down to 212 thousand, shy of the estimate of 215 thousand. On Friday, Canada releases CPI and the U.S publishes Preliminary UoM Consumer Sentiment.

The Canadian dollar remains under pressure as the US currency continues to shine. On Wednesday, USD/CAD touched a high of 1.3175, its highest level since July 16. Strong U.S data continues to boost the greenback, and this was the case on Wednesday, as retail sales were unexpectedly strong. Core retail sales posted a gain of 0.5% for a second straight month, easily beating the forecast of 0.1%. If consumer confidence follows suit with a strong reading on Friday, it could be a sign of another strong quarter of economic growth.

Negotiations over NAFTA have progressed slowly, but policymakers in Canada and Mexico are hopeful that the flexibility that the U.S has shown towards the European Union will extend to NAFTA as well. Canadian and Mexican officials are hoping to reach an agreement, despite U.S President Trump’s stated preference for bilateral agreements. NAFTA is a key component of the Canadian economy and with 80% of the country’s exports headed the U.S., the lingering delays in reaching a new NAFTA accord have weighed on the Canadian dollar. If the parties are able to reach a new agreement, traders can expect the Canadian dollar to move higher.

USD/CAD Fundamentals

Thursday (August 16)

• 8:30 Canadian Manufacturing Sales. Estimate 1.0%. Actual 1.1%
• 8:30 Canadian ADP Nonfarm Employment Change. Actual 11.6K
• 8:30 US Building Permits. Estimate 1.31M. Actual 1.31M
• 8:30 US Housing Starts. Estimate 1.27M. Actual 1.17M
• 8:30 US Philly Fed Manufacturing Index. Estimate 21.9. Actual 11.9
• 8:30 US Unemployment Claims. Estimate 215K. Actual 212K
• 10:30 US Natural Gas Storage. Estimate 30B

Friday (August 17)

• 8:30 Canadian CPI. Estimate 0.1%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.1

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, August 16, 2018

USD/CAD, August 16 at 9:35 DST

Open: 1.3141 High: 1.3159 Low: 1.3114 Close: 1.3143

USD/CAD Technical

USD/CAD posted small losses in the Asian session but reversed directions and posted gains in European trade. The pair is steady in North American trade

• 1.3067 is providing support
• 1.3160 is under pressure in resistance
• Current range: 1.3067 to 1.3160

Further levels in both directions:

• Below: 1.3067, 1.2970, 1.2831 and 1.2733
• Above: 1.3160, 1.3292 and 1.3436

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