USD/CAD – Canadian Dollar Shrugs off Weak Job Numbers, Dramatic Ontario Election
It continues to be an uneventful week for the Canadian dollar, and the trend has continued on Friday. Currently, USD/CAD is trading at 1.3002, up 0.17% on the day. In economic news, Canadian housing and employment data disappointed. Housing Starts dropped to 196 thousand, well off the estimate of 214 thousand. Employment Change declined by 7.5 thousand, missing the forecast of a 19.1 thousand gain. The unemployment rate remained pegged at 5.8%. There are no major U.S events on the schedule.
All eyes were on the Ontario election on Thursday, and although there was a sharp shift to the right, the Canadian dollar yawned and continued to hug the symbolic 1.30 level. The Conservatives won a decisive majority of seats, as the business sector sighed in relief. With the Conservatives and the left-wing NDP running neck-and-neck in the polls, there had been concerns that the NDP could win the election, or at least deny the Conservatives a majority. The new premier, Doug Ford, is a former businessman and investors can expect the new government to have a pro-business platform. This should translate into gains for Canadian stock markets as well as the Canadian dollar.
Prime Minister Justin Trudeau will play host to the G-7 meeting in Quebec City, which begins on Friday. However, the embraces and smiles could be a formality ahead of some heated discussions, as the summit comes at a time of escalating trade tensions between the U.S and some of its major trading partners. Last week, finance ministers from six members of the G-7 were united in their criticism of US Treasury Secretary Steve Mnuchin over the brewing trade war. The trouble started last week, when the Trump administration slapped stiff tariffs on Canada, Mexico and the European Union. This resulted in promises of retaliation, and Canada and Mexico have already announced duties on U.S products. Will we see a higher profile, repeat performance at this meeting? The escalating trade battle is sure to dominate the summit, where Trump can expect to hear strong complaints from other leaders over the tariffs, which Trump justified on the grounds of ‘national security’. If the leaders fail to resolve matters, the result could be a nasty trade war between the U.S and its major trading partners.
Friday (June 8)
- 8:15 Canadian Housing Starts. Estimate 219K. Actual 196K
- 8:30 Canadian Employment Change. Estimate 19.1K. Actual -7.5K
- 8:30 Canadian Unemployment Rate. Estimate 5.8%. Actual 5.8%
- 8:30 Canadian Capacity Utilization Rate. Estimate 86.3%. Actual 86.1%
- Day 1 – G7 Meetings
- 10:00 US Final Wholesale Inventories. Estimate 0.9%
*All release times are DST
*Key events are in bold
USD/CAD for Friday, June 8, 2018
USD/CAD, June 8 at 8:55 DST
Open: 1.2973 High: 1.3042 Low: 1.2969 Close: 1.3002
USD/CAD was flat in the Asian session and has edged higher in European trade. The pair is steady in North American session
- 1.2943 is providing support
- 1.3015 was tested earlier in resistance and is a weak line. It could break in the North American session
- Current range: 1.2943 to 1.3015
Further levels in both directions:
- Below: 1.2943, 1.2850 and 1.2757
- Above: 1.3015, 1.3125, 1.3224 and 1.3315
OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged in the Friday session. Currently, long positions have a majority (63%), indicative of USD/CAD continuing to move higher.
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