USDCAD Forecast: Canadian Dollar Steady Ahead of Canadian, U.S Job Reports

The Canadian dollar is steady in the Thursday session, after posting gains on Wednesday. Currently, USD/CAD is trading at 1.2778, down 0.10% on the day. In economic news, Canada releases Foreign Securities Purchases and ADP Nonfarm Employment Change. In the U.S, the Philly Fed Manufacturing Index is expected to drop to 21.2, while unemployment claims are forecast to rise to 216 thousand.

Negotiations over a new NAFTA agreement have failed to reach a conclusion, and the parties haven’t even reached an ‘agreement in principle’. Although there is no official deadline to wrap up a deal, there are upcoming events which could mean that a deal won’t be made in 2018. Mexico holds general elections in June and the U.S holds congressional mid-term elections in November. Meanwhile, the Trump administration has given both Canada and Mexico another 30-day exemption on steel and aluminum tariffs, lasting until June 1. Earlier in the week, U.S Commerce Secretary Wilbur Ross said that further extensions could be granted, depending on the progress made in the NAFTA talks. Ottawa has demanded “full and permanent” exemptions from the tariffs, but may have to cough up more concessions in the NAFTA talks in order to convince Washington to exempt Canadian steel and aluminum imports from tariffs.

The U.S economy continues to perform well, but 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%, and the US dollar could continue to make broad gains as we get closer to the June policy meeting.

The trend is your friend.

Dollar Consolidates ahead of Today’s Event Risk

USD/CAD Fundamentals

• 8:30 Canadian Foreign Securities Purchases. Estimate 3.00B

• 8:30 Canadian ADP Nonfarm Employment Change

• 8:30 US Philly Fed Manufacturing Index. Estimate 21.1

• 8:30 US Unemployment Claims. Estimate 219K

• 10:00 US CB Leading Index. Estimate 0.4%

• 10:30 US Natural Gas Storage. Estimate 105B

• 8:30 Canadian CPI. Estimate 0.3%

• 8:30 Canadian Core Retail Sales. Estimate 0.5%

• 8:30 Canadian Retail Sales. Estimate 0.3%

Open: 1.2791 High: 1.2796 Low: 1.2750 Close: 1.2778

USD/CAD Technical

USD/CAD edged lower in the Asian session and has recovered in European trade

• 1.2757 was tested earlier in support. It is a weak line

• 1.2850 is the next line of resistance

• Current range: 1.2757 to 1.2850

Further levels in both directions:

• Below: 1.2757, 1.2687 and 1.2527

• Above: 1.2850, 1.2943, 1.3015 and 1.3125