USD/CAD – Canadian dollar at 3-month high after strong weekly gains

USD/CAD has posted small gains in the Monday session. Currently, the pair is trading at 1.3116, up 0.11% on the day. In economic news, it’s a quiet start to the week, with no Canadian releases until Wednesday. The U.S. releases factory orders, which is expected to rebound with a gain of 0.3%, after a decline of 2.1% in the previous release. On Tuesday, the key event is ISM Non-manufacturing PMI.

The Canadian dollar enjoyed a strong week, posting gains of close to 1.0%. USD/CAD slipped on Wednesday as the Federal Reserve reinforced its dovish stance. At its first monetary policy update of 2019, Federal chair Powell said that the central bank would be “patient” regarding future rate hikes. It was an aggressive 2018 for the Fed, which raised rates four times last year, in response to a hot U.S. economy. However, with a global trade war in full force and U.S. growth slightly lower, the Fed has trimmed its forecast to two interest rates in 2019. Many analysts have gone further, predicting no rate hikes this year.

In the U.S., the week ended with mixed employment numbers. The economy created 304 thousand jobs, crushing the estimate of 165 thousand. This was the second score above the 300-thousand mark for a second successive month. However, wage growth was a disappointment, dropping from 0.4% to 0.1%. This fell shy of the estimate of 0.3% and marked the weakest reading since April 2018. Despite the sparkling non-farm payrolls, USD/CAD edged lower on Friday, as greenback bulls focused on the weak wage growth numbers.

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USD/CAD Fundamentals

Monday (February 4)

• 15:00 US Factory Orders. Estimate 0.3%
• Tentative – US Loan Officer Survey

Tuesday (February 5)

• 15:00 US ISM Non-Manufacturing PMI. Estimate 57.0

*All release times are EST

*Key events are in bold

USD/CAD for Monday, February 4, 2019

USD/CAD, February 4 at 8:15 EST

Open: 1.3100 High: 1.3114 Low: 1.3086 Close: 1.3116

USD/CAD Technical

USD/CAD showed limited movement in the Asian session. In European trade, the pair posted small gains but has reversed directions and gained ground

• 1.3049 is providing support
• 1.3125 is a weak resistance line
• Current range: 1.3049 to 1.3125

Further levels in both directions:

• Below: 1.3049, 1.2955 and 1.2844
• Above: 1.3125, 1.3200, 1.3290 and 1.3383

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