USD/CAD Forecast: Canadian dollar calm on lack of data

Kenny Fisher MarketPulse

USD/CAD is showing little movement in the Monday session. Currently, the pair is trading at 1.3235, down 0.15% on the day. In the U.S., banks are closed for a holiday. There are no U.S. or Canadian events on the calendar, so traders can expect limited movement from USD/CAD.

Recent Canadian numbers have been mixed. The economy created 66.8 thousand jobs in January, crushing the forecast of 6.5 thousand. However, manufacturing sales has recorded declines of 1.3% in December and 1.4% in November. The manufacturing sector has sputtered, as the global trade war has lessened the demand for Canadian exports. As well, low oil prices are weighing on the economy and on the Canadian dollar. The currency has slipped 1.2% in February. The Bank of Canada is unlikely to raise rates at the March 6 meeting, but there is room for rate hikes later in the year if economic growth improves.

Is the U.S. economy slowing down? There are concerns about the strength of the economy, after soft consumer data in January. Retail sales and core retail sales showed sharp contraction, and these numbers came on the heels of soft inflation indicators. Inflation remains low, despite a strong labor market. CPI showed no change in January and has failed to post a gain since November. Core CPI has recorded weak gains of 0.2% for four successive months. On an annualized basis, CPI gained 1.6% in January, the weakest year-over-year gain since mid-2017. The soft inflation numbers were a result of low energy prices, which fell 3.1% in January as oil prices remain under pressure.

Markets in long-weekend slumber

Regional markets to have their say on President’s Day

USD/CAD Fundamentals

There are no U.S. or Canadian events

Open: 1.3255 High: 1.3256 Low: 1.3226 Close: 1.3237

USD/CAD Technical

S3	S2	S1	R1	R2	R3
1.3049	1.3125	1.3200	1.3290	1.3383	1.3445

USD/CAD ticked lower in the Asian session and has been mostly flat in European trade

1.3200 is providing support
1.3290 is the next resistance line
Current range: 1.3200 to 1.3290

Further levels in both directions:

Below: 1.3200, 1.3125 and 1.3049
Above: 1.3290, 1.3383, 1.3445 and 1.3547

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

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