USD/CAD – Canadian Dollar Gains Ground, US Retail Sales Ahead

The Canadian dollar has started the week with gains. Currently, USD/CAD is trading at 1.2756, down 0.34% on the day. On the economic front, Canada releases key jobs data. The economy is expected to add 17.8 thousand jobs, compared to 32.3 thousand a month earlier. The unemployment rate is expected to remain steady at 5.8 percent. In the US, the markets are expecting UoM Consumer Sentiment to improve to 98.4 points.

Canadian employment numbers were mixed on Friday. The economy shed 1100 jobs in April, surprising analysts that had predicted a strong gain of 17.8 thousand. This marked the first decline since January. There was better news from wage growth, which jumped 3.3% in April on an annualized basis.  The Canadian currency has received a boost from strong oil prices, which are at the highest level in 3-1/2 years. President Trump’s bombshell announcement that the US would withdraw from the Iran nuclear deal, as well as tensions in the Middle East have raised fears of supply disruptions and have significantly pushed up the price of crude.

With the U.S economy firing on all cylinders, the U.S consumer is feeling very optimistic. On Friday, the UoM Consumer Sentiment improved to 98.8 in April, beating the estimate of 98.4 points. The U.S labor market is at near or full employment, which has resulted in a slowdown in job growth due to a shortage of skilled workers. This was underscored last week, as JOLTS Job Openings climbed to a record 6.6 million. At the same time, inflation levels remain low, as the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. The odds of a rate hike at the June hike stands close to 100%.

 

USD/CAD Fundamentals

Monday (May 14)

  • 2:45 US FOMC Member Loretta Mester Speaks

Tuesday (May 15)

  • 8:30 US Core Retail Sales. Estimate 0.5%
  • 8:30 US Retail Sales. Estimate 0.4%
  • 8:30 US Empire State Manufacturing Index. Estimate 15.1

*All release times are DST

*Key events are in bold

 

USD/CAD for Monday, May 14, 2018

USD/CAD, May 14 at 8:10 DST

Open: 1.2799 High: 1.2799 Low: 1.2756 Close: 1.2756

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2398 1.2527 1.2687 1.2757 1.2850 1.2943

USD/CAD posted small losses in the Asian session but recovered. The pair and has edged lower in European trade

  • 1.2687 is providing support
  • 1.2757 is under pressure in resistance
  • Current range: 1.2687 to 1.2757

Further levels in both directions:

  • Below: 1.2687, 1.2527 and 1.2398
  • Above: 1.2757, 1.2850, 1.2943 and 1.3015

OANDA’s Open Positions Ratio

USD/CAD ratio is showing movement towards long positions. Currently, short positions have a majority (57%), indicative of trader bias towards USD/CAD continuing to move downwards.

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.