USD/CAD – Canadian Dollar Unable to Gain Ground after Stellar Retail Sales

USD/CAD has edged higher in the Wednesday session. Currently, the pair is trading slightly below the 1.34 line. On the release front, there are no Canadian economic indicators. The US will release Existing Home Sales and Crude Oil Inventories. On Thursday, we’ll get a look at unemployment claims.

Canada’s retail sales were stellar in January, indicative of a strong increase in consumer spending. Core Retail Sales jumped 1.7%, beating the forecast of 1.3%. This marked the strongest gain since February 2015. Retail Sales sparkled with a gain of 2.2%, compared to an estimate of 1.3%. The strong figures point to a strong first quarter for the economy, and weak retail sales data in December appear to be a seasonal distortion. The Canadian dollar climbed higher immediately after these releases, but was unable to consolidate and ended the Tuesday session almost unchanged.

With little in the way of key fundamentals this week, the markets are focusing on comments from FOMC members who will be speaking this week, including Fed Chair Janet Yellen on Thursday. On Monday, Chicago Fed President Charles Evans said he expects the Fed to raise rates two more times this year. This echoes the Fed’s dot point plot as well as last week’s rate statement. Although three rate hikes in 2017 would be no mean feat, the markets would like four hikes, given the strong performance of the US economy. The Fed’s cautious approach has disappointed the markets, as the US dollar has posted broad losses since the Fed policy meeting. The Canadian dollar jumped on the bandwagon and posted gains last week, although it has reversed directions and dipped lower this week.

USD/CAD Fundamentals

Wednesday (March 22)

• 9:00 US HPI. Estimate 0.4%
• 10:00 US Existing Home Sales. Estimate 5.59M
• 10:30 US Crude Oil Inventories. Estimate 1.9M
• 15:45 BoC Deputy Governor Lawrence Schembri Speech

Upcoming Key Events

Thursday (March 23)

• 8:30 US Unemployment Claims. Estimate 240K
• 8:45 US Fed Chair Janet Yellen Speech

*All release times are GMT

*Key events are in bold

USD/CAD for Wednesday, March 22, 2017

USD/CAD March 22 at 8:15 EST

Open: 1.3359 High: 1.3409 Low: 1.3354 Close: 1.3382

USD/CAD Technical

• USD/CAD has edged higher in the Asian and European sessions
• 1.3371 is fluid. Currently, it is a weak support line
• 1.3461 is the next resistance line

Further levels in both directions:

• Below: 1.3371, 1.3253, 1.3120 and 1.3006
• Above: 1.3461, 1.3551 and 1.3672
• Current range: 1.3371 to 1.3461

OANDA’s Open Positions Ratio

USD/CAD ratio is showing small gains towards long positions. Currently, short positions have a majority (58%), indicative of trader bias towards USD/CAD reversing directions and moving lower.

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