USD/CAD: Canadian Dollar Improves As U.S. Suspends Tariff Increase

The Canadian dollar has jumped to a two-week high in the Monday session. Currently, is trading at 1.3175, down 0.88% on the day. On the release front, the key U.S. indicator is , which is expected to edge lower to 57.5 points. Canada will also release . On Tuesday, Canada publishes , which is forecast to dip to 0.4%.

Canada’s GDP declined 0.2% in September, marking the first month the economy has contracted since January. This fell short of the estimate of 0.1%. The decline was attributed to weaker motor vehicle purchases and a softer housing market. The Bank of Canada is keeping a close eye on the strength of the economy, and the markets are predicting that the BoC will not raise interest rates at the policy meeting on Dec. 5. As well, falling oil prices is another factor in favor of the BoC not taking any action.

Investor risk appetite has jumped on Monday, and that has translated into strong gains for minor currencies like the Canadian dollar. On Monday, the currency improved to its highest level since Nov. 20. The catalyst for the boost was the meeting between U.S. President Donald Trump and Chinese President Xi Jinping on the sidelines of the G-20 summit. Just last week, Trump had threatened to raise tariffs on $200 billion in Chinese products from 10 percent to 25 percent on Jan. 1. However, the tone was optimistic after the meeting, with China receiving a short reprieve. The sides have agreed to continue talks for another 90 days, and the U.S. tariffs will take effect if no agreement is reached. The markets were clearly relieved that the tariff war has de-escalated, and European markets have jumped on Monday, following the lead of Asian markets. At the same time, the U.S. and China remain far apart on resolving the trade war, and the greenback will likely reverse directions unless the parties make substantial progress in the trade dispute, which has shaken the markets and threatens to derail global growth.

USD/CAD Fundamentals

  • 9:30 Canadian Labor Productivity. Estimate 0.4%

USD/CAD for Monday, December 3, 2018

USD/CAD for Dec. 2-4, 2018.

USD/CAD for Dec. 2-4, 2018.

USD/CAD, December 3 at 8:40 EST

Open: 1.3291 High: 1.3291 Low: 1.3161 Close: 1.3175

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2888 1.2970 1.3099 1.3198 1.3292 1.3383

USD/CAD posted considerable losses in the Asian session and has posted small losses in European trade

  • 1.3099 is providing support
  • 1.3198 is the next resistance line
  • Current range: 1.3099 to 1.3198

Further levels in both directions:

  • Below: 1.3099, 1.2970 and 1.2888
  • Above: 1.3198, 1.3292, 1.3383 and 1.3461

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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