USD/CAD – Canadian dollar higher on stronger business optimism

The Canadian dollar has posted gains in the Tuesday session. Currently, USD/CAD is trading at 1.2950, down 0.31% on the day. On the release front, Canadian Foreign Securities was dismal, with a gain of just C$2.82 billion. This was much smaller than the estimate of C$10.05 billion. In the U.S, there are no major events on the schedule. JOLTS Job Openings is expected to dip to 6.90 million. The markets are still waiting for the U.S Treasury to release its semi-annual currency report, which may occur later on Tuesday. On Wednesday, Canada releases Manufacturing Sales. The U.S will release Building Permits and Housing Starts, and the Federal Reserve will publish its minutes from the September policy meeting.

USD/CAD has lost ground this week, as the Canadian dollar has recovered most of last week’s losses. The currency received a boost from an optimistic Bank of Canada business survey on Monday. The poll found that businesses expect higher sales for both domestic and foreign customers. Companies are reporting increased investment and hiring, and the mood is optimistic in the business sector. Investors are keeping an eye on the BoC, which set the benchmark rate next week. The markets are widely expecting the BoC to raise rates by a quarter-point, which would match the Fed rate hike in September.

U.S data were a mixed bag on Monday, as retail sales were soft but manufacturing data was solid. Retail Sales posted a meager gain of 0.1%, shy of the estimate of 0.4%. Core Retail Sales surprised with a decline of 0.1%, compared to an estimate of 0.4%. This marked the first decline since June 2017. There was better news from the manufacturing front, as Empire State Manufacturing Index strengthened to 21.1, above the estimate of 20.4 points.

Asia Market update : A time out

Risk remains on the back foot

The buck cannot find a bid

USD/CAD Fundamentals

Tuesday (October 16)

• 8:30 Canadian Foreign Securities Purchases. Estimate 10.05B
• 9:15 US Capacity Utilization Rate. Estimate 78.2%
• 9:15 US Industrial Production. Estimate 0.2%
• 10:00 US JOLTS Job Openings. Estimate 6.90M
• 10:00 US NAHB Housing Market Index. Estimate 68
• 16:00 US TIC Long-Term Purchases. Estimate 50.3B
• 16:15 US FOMC Member Mary Daly Speaks
• Tentative – US Treasury Currency Report

Wednesday (October 17)

• 8:30 Canadian Manufacturing Sales
• 8:30 US Building Permits. Estimate 1.28M
• 8:30 US Housing Starts. Estimate 1.21M
• 10:30 US Crude Oil Inventories
• 12:10 US FOMC Member Lael Brainard Speaks
• 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

USD/CAD for Tuesday, October 16, 2018

USD/CAD, October 16 at 8:55 DST

Open: 1.2991 High: 1.2999 Low: 1.2950 Close: 1.2950

USD/CAD Technical

USD/CAD ticked higher in the Asian session. The pair has posted losses in the European session and is steady early in North American trade

• 1.2831 is providing support
• 1.2970 has switched to a resistance line after losses by USD/CAD
• Current range: 1.2831 to 1.2970

Further levels in both directions:

• Below: 1.2831, 1.2733 and 1.2649
• Above: 1.2970, 1.3067, 1.3198 and 1.3292

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