USD/CAD has posted gains on Tuesday, erasing the gains which marked the Monday session. Currently, the pair is trading at 1.2477, up 0.27% on the day. On the release front, there are no Canadian events. In the US, the sole indicator is the Richmond Manufacturing Index, which is expected to edge lower to 19 points.
US President Trump has threatened to cancel the pact unless Mexico and Canada make major concessions to the US. If the agreement is terminated, the Canadian dollar would likely take a tumble. Another round of negotiations is slated to be held in Montreal next week, and a lack of progress could weigh on the Canadian dollar.
The NAFTA free trade agreement is critical for the Canadian economy, so threats by US President Trump to blow up the agreement are causing genuine concern for the Bank of Canada. Negotiations between Canada, Mexico and the US have not yielded much progress, and a sixth round of negotiations start on Tuesday. Trump has repeatedly said he is unhappy with the deal, and an advisory council to Canadian Foreign Minister Chrystia Freeland sounded pessimistic about a new trilateral deal being reached. Still, Trump is unpredictable, and there are also many US companies that benefit from the current deal and are opposed to the US pulling the plug. If NAFTA is terminated, it’s likely the Canadian dollar will take a tumble.
The US government shutdown is over, after just three days. On Monday, the Senate voted 266-150 to extend funding until February 8. This stopgap measure will enable the government to provide services during that time, but the parties will have to hammer out a longer-term agreement. The Democrats held up a funding bill last week, in order to force the Republicans to the table over illegal immigration. The Republicans have promised to hold a vote on this issue, but many Democratic lawmakers remain skeptical that President Trump and the Republicans will deal in good faith over immigration.
Tuesday (January 23)
- 10:00 US Richmond Manufacturing Index. Estimate 19
Wednesday (January 24)
- 9:00 US HPI. Estimate 0.4%
- 9:45 US Flash Manufacturing PMI. Estimate 55.2
- 9:45 US Flash Services PMI. Estimate 54.5
- 10:00 US Existing Home Sales. Estimate 5.72M
- 10:30 US Crude Oil Inventories
*All release times are GMT
*Key events are in bold
USD/CAD for Tuesday, January 23, 2018
USD/CAD, January 23 at 7:55 EDT
Open: 1.2443 High: 1.2491 Low: 1.2438 Close: 1.2477
USD/CAD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2060 | 1.2190 | 1.2351 | 1.2494 | 1.2630 | 1.2757 |
USD/CAD inched higher in the Asian session and continues to move higher in European trade
- 1.2351 is providing support
- 1.2494 is the next resistance line
- Current range: 1.2351 to 1.2494
Further levels in both directions:
- Below: 1.2351, 1.2190 and 1.2060
- Above: 1.2494, 1.2630, 1.2757 and 1.2860
OANDA’s Open Positions Ratio
In the Tuesday session, USD/CAD ratio is unchanged. Currently, long positions have a majority (61%), indicative of trader bias towards USD/CAD continuing to move to higher ground.