USD/CAD – Canadian Dollar Slips, US Retail Sales Misses Mark

The Canadian dollar has posted considerable slight losses in the Tuesday session. Currently, USD/CAD is trading at 1.2897, up 0.66% on the day. On the economic front, there are no Canadian events on the schedule. In the US, the focus is on consumer spending reports. Retail Sales dipped to 0.3%, shy of the estimate of 0.4%. Core Retail Sales edged up to 0.3%, but missed the forecast of 0.5%. On Wednesday, Canada releases Manufacturing Production and the US will release construction reports.

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 some help 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 performing well in 2018, 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%.

Yields in focus, again

Rate Differentials and Trade Fears Handcuff Capital Markets

 

USD/CAD Fundamentals

Tuesday (May 15)

  • 8:30 US Core Retail Sales. Estimate 0.5%. Actual 0.3%
  • 8:30 US Retail Sales. Estimate 0.4%. Actual 0.3%
  • 8:30 US Empire State Manufacturing Index. Estimate 15.1. Actual 20.1
  • 10:00 US Business Inventories. Estimate 0.2%
  • 10:00 US NAHB Housing Market Index. Estimate 70
  • 12:45 US FOMC Member John Williams
  • 16:00 US TIC Long-Term Purchases

Wednesday (May 16)

  • 8:30 Canadian Manufacturing Production
  • 8:30 US Building Permits. Estimate 1.35M
  • 8:30 US Housing Starts. Estimate 1.33M

*All release times are DST

*Key events are in bold

 

USD/CAD for Tuesday, May 15, 2018

USD/CAD, May 15 at 9:05 DST

Open: 1.2812 High: 1.2848 Low: 1.2792 Close: 1.2897

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2687 1.2757 1.2850 1.2943 1.3015 1.3125

USD/CAD was flat in the Asian session and has edged higher in European trade

  • 1.2850 is providing support
  • 1.2943 is the next resistance line
  • Current range: 1.2850 to 1.2943

Further levels in both directions:

  • Below: 1.2850, 1.2757, 1.2687 and 1.2527
  • Above: 1.2943, 1.3015 and 1.3125

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little movement in the Tuesday session Currently, short positions have a majority (55%), 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.