Canadian Dollar, Unchanged, Housing Data Impresses
Kenny Fisher | Mar 08, 2018 11:19AM ET
USD/CAD is unchanged in the Thursday session. In the North American session, USD/CAD is trading at 1.2911. On the release front, there are a host of Canadian releases. Housing Starts and Building Permits both beat expectations. On the inflation front, NHPI remained unchanged at 0.0%, shy of the forecast of 0.1%. We’ll also hear from BoC Governor Stephen Poloz, who will speak at an event in Halifax. In the US, unemployment claims jumped to 231 thousand, well above the estimate of 220 thousand. On Friday, employment data will be in focus on both sides of the border. Canada releases employment change, and the US publishes wage growth and nonfarm payrolls.
Will President Trump make do on his tariff threat? The Canadian government is seeing red after President Trump has threatened to impose 25% tariffs on Canadian steel imports. Canada is the top exporter of steel to the US, accounting for some 16% of US steel imports. The “tariff tussle” could prove to be a major irritant in US-Canada relations, and has weakened the Canadian dollar, as USD/CAD broke above the 1.30 line earlier this week, for the first time since late June. Trump is facing strong opposition to the move from Republican lawmakers, and has held out a carrot to Mexico and Canada – if a new NAFTA deal is reached, both countries would be exempted from the tariffs. Canada’s steel industry is a crucial backbone of the economy, and if the US does slap on the tariffs, it could ignite a trade war with Canada and other US trading partners.
The Federal Reserve is widely expected to raise rate four times in 2018, but the Bank of Canada will likely be unable to compete with that kind of pace. The BoC is concerned with economic growth, which slowed in the fourth quarter, as well as uncertainty over NAFTA, which could fall apart if the Trump administration makes good on its threat to withdraw if its demands for more favorable treatment for US goods is not met. The Bank is not expected to raise rates before May, and if the Fed outpaces the BoC on the rate front, the Canadian dollar could lose ground to a more attractive US currency.
USD/CAD Fundamentals
Thursday (March 8)
- 7:30 US Challenger Job Cuts. Actual -4.3%
- 8:15 Canadian Housing Starts. Estimate 217K. Actual 230K
- 8:30 Canadian Building Permits. Estimate -0.3%. Actual 5.6%
- 8:30 Canadian NHPI. Estimate 0.1%. Actual 0.0%
- 8:30 US Unemployment Claims. Estimate 220K
- 10:30 US Natural Gas Storage. Estimate -58B
- 11:00 BoC Governor Stephen Poloz Speaks
- 15:35 BoC Deputy Governor Timothy Lane Speaks
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Friday (March 9)
- 8:30 Canadian Employment Change. Estimate 21.8K
- 8:30 Canadian Unemployment Rate. Estimate 5.9%
- 8:30 US Average Hourly Earnings. Estimate 0.2%
- 8:30 US Nonfarm Employment Change. Estimate 201K
- 8:30 US Unemployment Rate. Estimate 4.0%
*All release times are GMT
*Key events are in bold
USD/CAD for Thursday, March 8, 2018
USD/CAD, March 8 at 7:10 EST
Open: 1.2911 High: 1.2951 Low: 1.2867 Close: 1.2911
USD/CAD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2757 | 1.2865 | 1.2920 | 1.3014 | 1.3165 | 1.3270 |
USD/CAD edged lower in the Asian session but has reversed directions and climbed higher in European trade. The pair has ticked lower in North American trade
- 1.2920 remains fluid. Currently it providing weak support
- 1.3014 is the next resistance line
- Current range: 1.2920 to 1.3014
Further levels in both directions:
- Below: 1.2920, 1.2865, 1.2757 and 1.2630
- Above: 1.3014, 1.3165 and 1.3270
OANDA’s Open Positions Ratio
USD/CAD ratio is showing little movement this week. Currently, short positions have a majority (60%), indicative of trader bias towards USD/CAD breaking out and moving lower.
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