USD/CAD – Canadian Dollar Jumps as Trump Press Conference Disappoints

The Canadian dollar has posted sharp losses in the Thursday session. Currently, USD/CAD is trading at 1.3050. On the release front, Canada releases NHPI, an important inflation indicator. In the US, today’s highlight is unemployment claims, with the indicator expected to rise to 266 thousand. We’ll also hear from two FOMC members – Charles Evans and Patrick Harker. Friday promises to be busy, with the US releasing retail sales and consumer confidence reports.

The US dollar was broadly lower after Donald Trump’s press conference on Wednesday. The Canadian dollar took advantage and has hit a low of 1.3042 on Thursday, its lowest level since October 19. There was plenty of anticipation ahead of the press conference on Thursday, but the event quickly turned into a spectacle rather than a platform outlying the president-elect’s plans as president. The markets were hoping to hear some specifics about Trump’s economic policy, but the president-elect didn’t comply. Instead, Trump focused on attacking the media for releasing damaging material on him, and also presented his plan to avoid business conflicts while in office. The markets were clearly disappointed with the theatrics, sending the greenback lower.

During the recent presidential campaign, Trump had plenty to say about the ills of the US economy on the campaign trail, but was short on solutions. He has gone on record promising tax cuts and significant fiscal spending to repair the country’s infrastructure. This has led to expectations of reflation in the US, after years of low inflation levels. What does this mean for the currency markets? Lower taxes and higher spending (assuming both can be done simultaneously), would boost the US economy and raise inflation levels. This would likely lead to further rate hikes, which is bullish for the US dollar. The greenback has impressed since the US election, posting gains against most of its major rivals.

Fed Officials Up Next After Trump Spooks Markets

Lack of Details Unwind the Trumpflation Trade

USD/CAD Fundamentals

Thursday (January 12)

• 8:30 Canadian NHPI. Estimate 0.3%
• 8:30 US Unemployment Claims. Estimate 266K
• 8:30 US FOMC Member Charles Evans Speech
• 8:30 US FOMC Member Patrick Harker Speech
• 8:30 US Import Prices. Estimate 0.8%
• 10:30 US Natural Gas Storage. Estimate -150B
• 13:01 US 30-year Bond Auction
• 14:00 US Federal Budget Balance. Estimate 21.0B
• 19:00 Federal Reserve Chair Janet Yellen Speech

Friday (January 13)

• 8:30 US Core Retail Sales. Estimate 0.5%
• 8:30 US PPI. Estimate 0.1%
• 8:30 US Retail Sales. Estimate 0.5%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.6

*All release times are GMT

*Key events are in bold

USD/CAD for Thursday, January 12, 2017

USD/CAD January 12 at 8:00 EST

Open: 1.3164 High: 1.3170 Low: 1.3042 Close: 1.3052

USD/CAD Technical

• USD/CAD has posted gains in the Asian session and has continued to lose ground in European session
• 1.3003 is providing support
• 1.3120 is a weak resistance line

Further levels in both directions:

• Below: 1.3003, 1.2922 and 1.2815
• Above: 1.3120, 1.3253, 1.3371 and 1.3457
• Current range: 1.3003 to 1.3120

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in the Thursday session. Currently, long positions have a majority (65%), indicative of trader bias towards USD/CAD reversing directions and  moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.