USDCAD Forecast: Canadian dollar quiet as U.S, Canadian banks closed

The Canadian dollar has ticked higher in the Monday session. Currently, USD/CAD is trading at 1.3193, down 0.07% on the day. Canadian and U.S banks are closed for a holiday, so traders should not expect much movement from the pair on Monday. There are no Canadian events and just one minor event in the United States.

Inflation continues to rise higher in the United States. On Friday, the Producer Price Index (PPI) jumped 0.6%, its sharpest gain since January 2017. This easily beat the estimate of 0.2%. Core PPI was also sharp, with a gain of 0.5%, compared to a gain of 0.2%. Stronger inflation will reinforce expectations that the Fed will hike rates hike in December. Currently, the odds of a quarter-percent rate hike stands at 76%. On the consumer front, UoM consumer sentiment dropped to 98.3, down from 99.0 points. Still, this beat the forecast of 98.0 points.

The Canadian economy continues to perform well, but strong numbers have not been enough to boost a struggling Canadian dollar. This was underscored on Thursday by a superb reading from Ivey PMI, a key gauge of economic activity. The indicator surged to 61.8 in November, up sharply from 50.4 in October. This reading easily beat the estimate of 50.9 points. Earlier this week, Bank of Canada Governor Stephen Poloz said that the Bank would continue gradually raising rates from the current 1.75% to a “neutral stance” of between 2.5% and 3.5%. The magic question for investors is how quickly the BoC will move in this direction. The BoC has raised rates some five times in the past 15 months, and upcoming rate hikes will help make the Canadian dollar an attractive option for investors.

European open – Brexit and Italy risks this week

US Dollar Flying High on Hawkish Fed Statement

 

USD/CAD Fundamentals

• Tentative – US Loan Officer Survey

• 14:30 US FOMC Member Mary Daly Speaks

Open: 1.3205 High: 1.3214 Low: 1.3183 Close: 1.3193

 

USD/CAD Technical

S3	S2	S1	R1	R2	R3
1.2831	12970	1.3099	1.3198	1.3292	1.3383

USD/CAD ticked higher in the Asian session and the trend has continued in European trade

• 1.3099 is providing support

• 1.3198 has switched to a resistance role following gains by USD/CAD on Friday. It remains a weak line

• Current range: 1.3099 to 1.3198

Further levels in both directions:

• Below: 1.3099, 1.2970, 1.2831 and 1.2733

• Above: 1.3198, 1.3292 and 1.3383