USD/CAD – Canadian Dollar Drops as US Durables Jump Higher

After an uneventful start to the day, the Canadian dollar is heading downward in Wednesday’s North American session. Early in this session, USD/CAD is trading at the 1.35 line. In the US, there are a host of major events. Core Durable Goods Orders rose 1.0% and Durable Goods Orders jumped 4.8%. Unemployment Claims were higher than expected, coming at 251 thousand. Later in the day, we’ll get a look at UoM Consumer Sentiment and the FOMC minutes from the November policy meeting.

Canadian indicators have started off the week on a sour note. On Monday, Wholesale Sales was well off the estimate. The indicator fell 1.2% in September, its first decline since March. The markets had expected a gain of 0.3%. On Tuesday, Retail sales numbers were a mix. Core Retail Sales remained stuck at 0.0%, well short of the estimate of 0.6%. However, Retail Sales rebounded with a gain of 0.6%, just shy of the forecast of 0.7%. The Canadian dollar shrugged off the retail sales reports, posting small gains on Tuesday.

The US dollar has posted impressive gains since Donald Trump won the US election earlier this month. With a Fed rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, Trump’s economic policy remains a mystery, so what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election platforms of increased spending and less taxes have been short on content and we will have to wait for the new Trump administration to unveil a detailed economic platform. Where does this leave the Federal Reserve? The Fed is in favor of gradual rate hikes next year, but this assumes that the US economy continues to strengthen. In testimony before a congressional committee last week, Fed chair Janet Yellen acknowledged the uncertainty created by Trump’s victory and said that the Fed might have to adjust its outlook, based on the new president’s economic policies.

USD/CAD Fundamentals

Wednesday (November 23)

• 8:30 US Core Durable Goods Orders. Estimate 0.2%. Actual 1.0%
• 8:30 US Unemployment Claims. Estimate 241K. Actual 251K
• 8:30 US Durable Goods Orders. Estimate 1.2%. Actual 4.8%
• 9:00 US HPI. Estimate 0.5%
• 9:45 US Flash Manufacturing PMI. Estimate 53.6
• 10:00 US New Home Sales. Estimate 591K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 91.6
• 10:00 US Revised UoM Inflation Expectations
• 10:30 US Crude Oil Inventories. Estimate 0.3M
• 12:00 US Natural Gas Storage. Estimate 7B
• 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

USD/CAD for Wednesday, November 23, 2016

USD/CAD November 23 at 8:45 EST

Open: 1.3432 High: 1.3496 Low: 1.3423 Close: 1.3491

USD/CAD Technical

• USD/CAD showed limited movement in the Asian and European sessions. Early in the North American session, the pair has posted considerable gains
• 1.3457 has switched to a support role following gains by USD/CAD
• 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 has remain unchanged all week. In the Wednesday session, short positions command a strong majority (60%), indicative of trader bias towards USD/CAD reversing directions and moving to lower ground.

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