USD/CAD – Canadian Dollar Hits 9-Week High

The Canadian dollar continues to rally, and has recorded five straight winning sessions. In the Thursday session, USD/CAD is trading at 1.2610, down 0.35%. There are no Canadian releases this week. In the US, today’s key event is unemployment claims, which is expected to drop to 240 thousand.

USD/CAD is down 1.9% since December 18, and a broadly lower greenback on Thursday has boosted the Canadian dollar to its highest level since late October. Canada’s GDP in October disappointed, with a flat reading of 0.0%. Still, recent consumer indicators have been strong. Retail Sales sparkled with a gain of 0.8% in October, well above the forecast of 0.4%. This was the indicator’s highest gain since April. As well, CPI improved to 0.3% in November, marking a five-month high. This edged above the estimate of 0.2%. The Canadian dollar has enjoyed an excellent December, but could face some headwinds next month, as the Federal Reserve is widely expected to raise interest rates at its January meeting, following the rate hike earlier in December.

With the US economy expanding above 3% in the third quarter, the Federal Reserve remains on track for another rate hike in January. The CME Group has pegged the odds of a January hike at 100%, which could give a boost to the US dollar. If the economy continues its impressive pace of growth above 3%, the Fed could raise rates up to four times in 2018. Despite strong economic conditions, the Federal Reserve’s inflation target of 2.0% remains elusive. Fed Chair Janet Yellen and other FOMC members have said that they expect that the strong labor market will lead to higher inflation. Although this is yet to materialize, of significance to the markets is the commitment of the Fed to press ahead with rate hikes despite low inflation.

USD/CAD Fundamentals 

Thursday (December 28)

  • 8:30 US Unemployment Claims. Estimate 241K
  • 8:30 US Goods Trade Balance. Estimate -67.7B
  • 8:30 US Preliminary Wholesale Inventories. Estimate 0.4%
  • 9:45 US Chicago PMI. Estimate 62.2
  • 10:30 US Natural Gas Storage. Estimate -115B
  • 11:00 US Crude Oil Inventories. Estimate -3.9M

*All release times are GMT

*Key events are in bold

 

USD/CAD for Thursday, December 28, 2017

USD/CAD, December 28 at 8:05 EDT

Open: 1.2654 High: 1.2661 Low: 1.2605 Close: 1.2610

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2190 1.2351 1.2494 1.2630 1.2757 1.2860

USD/CAD has posted slight losses in the Asian and European sessions

  • 1.2494 is providing support
  • 1.2630 has switched to a resistance role after losses by USD/CAD on Thursday. It remains a weak line
  • Current range: 1.2494 to 1.2630

Further levels in both directions:

  • Below: 1.2494 and 1.2351 and 1.22
  • Above: 1.2630, 1.2757, 1.2860 and 1.3015

OANDA’s Open Positions Ratio

In the Thursday session, USD/CAD ratio is showing little movement. Currently, long positions have a majority (55%), 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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.