USDCAD Forecast: Canadian dollar higher as risk appetite returns after US election

Kenny Fisher MarketPulse

The Canadian dollar has posted gains in the Wednesday session, USD/CAD is trading at 1.3080, down 0.33% on the day. On the release front, Canada releases Ivey PMI, which is expected to improve to 50.9 points. There are no major U.S releases on the schedule. On Thursday, Canada releases Housing Starts. In the U.S, the Federal Reserve will set the benchmark rate and release a rate statement. We’ll also get a look at unemployment claims.

Investors expressed relief that the uncertainty over the U.S mid-term elections is over, with both the Republicans and Democrats able to point to a victory of sorts. The markets were pleased that President Trump did not suffer a stinging defeat. Had the Democrats taken back both houses of Congress, Trump would have been a lame duck for the next two years, and he would have had great difficulty passing any further market-friendly reforms. The mixed results have improved risk appetite, and the Canadian dollar has responded with gains on Wednesday.

Participation was high in the mid-term elections on Tuesday, and voters rendered a split-decision. The Democrats regained control of the House of Representatives for the first time since 2010, but the Republicans maintained control of the Senate, and have increased their majority. The results are a setback for President Trump, as the Democrats will be in a stronger position to derail Trump’s plans to boost fiscal stimulus and lower taxes.

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USD/CAD Fundamentals

10:00 Canadian Ivey PMI. Estimate 50.9
10:30 US Crude Oil Inventories. Estimate 2.0M
13:01 US 30-year Bond Auction
15:00 US Consumer Credit. Estimate 15.7B
8:15 Canadian Housing Starts. Estimate 199K
8:30 US Unemployment Claims. Estimate 214K
14:00 US FOMC Statement
14:00 US Federal Funds Rate. Estimate <2.25%

Open: 1.3124 High: 1.3159 Low: 1.3073 Close: 1.3080

USD/CAD Technical

S3	S2	S1	R1	R2	R3
1.2733	12831	1.2970	1.3099	1.3198	1.3292

USD/CAD posted small losses in the Asian session. The pair moved higher early in European trade, but has reversed directions and moved lower.

1.2970 is providing support
1.3099 is the next resistance line
Current range: 1.2970 to 1.3099

Further levels in both directions:

Below: 1.2970, 1.2831 and 1.2733
Above: 1.3099, 1.3198, 1.3292 and 1.3383

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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