USD/CAD – Canadian dollar slide continues as Ivey PMI drops to 4-month low

The Canadian dollar has slipped 1.3% this week and continues to lose ground in the Thursday session. Early in North American trade, the pair is trading at 1.3274, up 0.46% on the day. On the release front, there are no Canadian releases. In the U.S., unemployment claims dropped to 234 thousand, but this was above the estimate of 220 thousand. On Friday, Canada releases employment change and the unemployment rate.

Canadian numbers were mixed on Wednesday. Ivey PMI, key gauge of economic activity, fell to 54.7 in January, its weakest score in four months. Building Permits was unexpectedly strong, jumping 6.0% in December. This was its strongest gain since May 2017.

With the Canadian economy showing signs of a slowdown, the mood of consumers remains fragile. Low oil prices and a weaker global economy have lowered demand for Canadian exports and weighed on inflation and wage levels. Consumer confidence is a strong barometer of the economy’s health, and if weaker consumer sentiment translates into decreased consumer spending, the economy could falter and drag down the Canadian dollar.

Meanwhile, the Bank of Canada appears to have taken a page out of the Federal Reserve’s playbook, and is expected to ease monetary policy this year after aggressively raising rates in 2018. On Wednesday, BoC Deputy Governor Tim Lane said that Canada’s fundamentals were strong and unemployment was at historically-low rates. However, Lane noted that the Canadian dollar was under pressure due to lower oil prices, a soft housing market and a decline in business investment due to uncertainty over U.S. trade policies.

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USD/CAD Fundamentals

Thursday (February 7)

• 8:30 US Unemployment Claims. Estimate 220K. Actual 236K
  
• 9:30 US FOMC Member Clarida Speaks
• 10:30 US Natural Gas Storage. Estimate -228B
• 13:01 US 30-year Bond Auction
• 15:00 US Consumer Credit. Estimate 16.5B
• 19:30 US FOMC Member Bullard Speaks

Friday (February 8)

• 8:15 Canadian Housing Starts. Estimate 206K
• 8:30 Canadian Employment Change. Estimate 6.5K
• 8:30 Canadian Employment Rate. Estimate 5.7%

*All release times are EST

*Key events are in bold

USD/CAD for Thursday, February 7, 2019

USD/CAD, February 7 at 8:35 EST

Open: 1.3213 High: 1.3258 Low: 1.3207 Close: 1.3274

USD/CAD Technical

USD/CAD posted slight gains in the Asian and European sessions

• 1.3200 is providing support
• 1.3290 is the next resistance line
• Current range: 1.3200 to 1.3290

Further levels in both directions:

• Below: 1.3200, 1.3125, 1.3049 and 1.2955
• Above: 1.3290, 1.3383 and 1.3445

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