The Canadian dollar is steady in the Monday session, after considerable losses on Friday. Currently, the pair is trading at 1.2435, up 0.06% on the day. On the release front, there are no Canadian releases on the schedule. In the US, the sole event on the calendar is ISM Non-Manufacturing PMI. The indicator is expected to rise to 56.5 points. On Tuesday, Canada releases the trade balance and Ivey PMI. The US will publish JOLTS Jobs Openings.
There was a changing of the guard at the Federal Reserve on the weekend, as Jerome Powell took over as chair, replacing Janet Yellen. On Friday, Yellen waxed optimistic about the economy, saying that strong growth, a red-hot labor market and increased wage growth would require the Fed to gradually raise interest rates. Powell is expected to continue to Yellen’s policies, so the markets are not expecting any dramatic shifts. However, the massive US tax cut will have a strong impact on the US economy, and the markets will be looking to the Fed for guidance. If the Fed sounds optimistic about the tax reform package, the US dollar could move higher.
Strong US employment numbers on Friday spelled bad news for the Canadian dollar, as USD/CAD jumped 1.3%. In the US, nonfarm payrolls jumped to 200 thousand, beating the estimate of 181 thousand. Wage growth remained steady at 0.3%, edging above the estimate of 0.2%. Will the strong numbers lead to additional interest rate hikes? Minneapolis Fed President Neel Kaskkari said on Friday that the Fed might need to be more aggressive if wages continued to move higher. The Fed is planning to raise rates three times in 2018, but some economists are forecasting four hikes.
USD/CAD Fundamentals
Monday (February 5)
- 10:00 US ISM Non-Manufacturing PMI. Estimate 56.5
- Tentative – US Loan Officer Survey
Tuesday (February 6)
- 8:30 Canadian Trade Balance. Estimate -2.38B
- 10:00 Canadian Ivey PMI
- 10:00 US JOLTS Jobs Openings. Estimate 5.95M
*All release times are GMT
*Key events are in bold
USD/CAD for Monday, February 5, 2018
USD/CAD, February 5 at 8:25 EDT
Open: 1.2427 High: 1.2451 Low: 1.2398 Close: 1.2435
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.1903 | 1.2060 | 1.2190 | 1.2351 | 1.2494 | 1.2630 |
USD/CAD has posted slight gains in the Asian and European sessions
- 1.2190 is providing support
- 1.2351 is the next resistance line
- Current range: 1.2190 to 1.2351
Further levels in both directions:
- Below: 1.2190, 1.2060 and 1.1903
- Above: 1.2351, 1.2494, 1.2630, and 1.2757
OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged in the Monday session. Currently, long positions have a majority (58%), indicative of trader bias towards USD/CAD continuing to move to higher ground.