USD/CAD – Canadian Dollar Edges Higher as Markets Eye Yellen Testimony

USD/CAD has edged upwards in the Tuesday session. Currently, the pair is trading at 1.3030. On the release front, there are no Canadian events on the schedule. In the US, we’ll get a look at PPI and Janet Yellen testifies before Congress on the semi-annual Monetary Policy Report. If Yellen reiterates that the Fed plans several rate hikes this year, the US dollar could make gains. On Wednesday, the US releases retail sales and CPI reports, and Yellen will continue her testimony before the US Senate.

Canadian Prime Minister Justin Trudeau jetted back to Ottawa after meeting President Trump in Washington on Monday. It was “mission accomplished” for the Canadian leader, who was looking for reassurances from Trump that he would not tear up NAFTA, the trade agreement which is the bedrock of the trade relationship between the two countries. After the leaders met, Trump said his biggest concern with NAFTA was with Mexico rather than its northern neighbor. Trump stated that the US has a “very outstanding trade relationship with Canada. We’ll be tweaking it.” Although Trudeau could do without the tweaking, Trump’s comments come as an enormous relief. Given that 80 percent of Canadian exports go to the US, any significant protectionist measures from the US could have drastic negative implications for the Canadian economy.

Will Donald Trump break radio silence and provide details about his economic stance? Trump has promised to cut taxes and spend big on infrastructure structures, but he has not released any details in this regard, much to the consternation of the markets. Last week, Trump said that the administration was working on a “phenomenal” tax plan, which would be released in a few weeks, although he gave no details. Trump’s plan is expected to lower taxes for both corporations and individuals, although tax reform promises to be a slow and daunting task. The markets are looking for some details regarding Trump’s plans for the US economy, and if Trump’s plan to reform the US tax code seems feasible, the markets could rally and push the US dollar to higher levels.

USD/CAD Fundamentals

Tuesday (February 14)

• 13:30 US PPI. Estimate 0.3%
• 15:00 US Fed Chair Janet Yellen Speech

Wednesday (February 15)

• 13:30 Canadian Manufacturing Sales. Estimate 1.4%
• 13:30 US CPI. Estimate 0.3%
• 13:30 US Core CPI. Estimate 0.2%
• 13:30 US Core Retail Sales. Estimate 0.4%
• 13:30 US Retail  Sales. Estimate 0.1%
• 15:00 US Fed Chair Janet Yellen Speech

*All release times are GMT

*Key events are in bold

USD/CAD for Tuesday, February 14, 2017

USD/CAD February 14 at 9:05 EST

Open: 1.3071 High: 1.3077 Low: 1.3021 Close: 1.3031

USD/CAD Technical

• USD/CAD posted small gains in the Asian and European sessions. The pair is steady early in North American trade
• 1.3003 is providing weak 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 1.3461
• Current range: 1.3003 to 1.3120

OANDA’s Open Positions Ratio

In the Tuesday session, USD/CAD ratio are showing movement towards long positions. Currently, long positions have a majority (60%), indicative of trader bias towards USD/CAD reversing directions and moving higher.

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