USD/CAD – Canadian Dollar Improves to 14-Day High, Retail Sales Next

The Canadian dollar is showing limited movement in the Tuesday session, following sharp gains on Monday. Currently, USD/CAD is trading at the 1.34 line. On the release front, Canada will publish key retail sales data. The markets are expecting a strong rebound in the September report, with the estimates for Core Retail Sales at 0.6% and Retail Sales at 0.7%. In the US, today’s highlight is Existing Home Sales, with the indicator expected to dip to 5.43 million. Wednesday will be much busier, with a host of key releases in the US, highlighted by Core Retail Sales and the FOMC meeting minutes.

Canadian indicators started off the week on a sour note, as 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%. The markets are expecting better news from retail sales, which are important gauges of consumer spending. If the readings match or beat the estimates, the Canadian dollar could post further gains against the greenback.

The US dollar has been on an impressive roll, bolstered by Donald Trump’s election victory earlier this month. With a rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, with a new government taking over the reins, what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election promises of more spending and less taxes have been vague and we will have to wait for the new Trump administration to unveil a detailed economic platform. The Federal Reserve 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

Tuesday (November 22)

• 8:30 Canadian Core Retail Sales. Estimate 0.6%
• 8:30 Canadian Retail Sales. Estimate 0.7%
• 10:00 US Existing Home Sales. Estimate 5.43M
• 10:00 US Richmond Manufacturing Index. Estimate 1 point

Wednesday (November 23)

• 8:30 US Core Retail Sales. Estimate 0.6%
• 8:30 US Retail Sales. Estimate 0.7%
• 8:30 US Core Durable Goods Orders. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 241K
• 10:00 US New Home Sales. Estimate 591K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 91.6
• 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

USD/CAD for Tuesday, November 22, 2016

USD/CAD November 22 at 6:40 EST

Open: 1.3409 High: 1.3433 Low: 1.3377 Close: 1.3396

USD/CAD Technical

• USD/CAD was flat in the Asian session and has posted slight losses in European trade
• 1.3371 is a weak support line
• There is resistance at 1.3457

Further levels in both directions:

• Below: 1.3371, 1.3253 and 1.3120
• Above: 1.3457, 1.3551, 1.3648 and 1.3782
• Current range: 1.3371 to 1.3457

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Tuesday session. Currently, short positions command a strong majority (60%), indicative of trader bias towards USD/CAD continuing to move to lower ground.

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.