USD/CAD drops to test 1.3000 on Canadian GDP, weaker USD
James Chen, CMT January 31, 2017 8:32 PM
Canada’s Gross Domestic Product (GDP) for November 2016 reported better-than-expected at +0.4% against forecast of +0.3%. Canadian dollar surged, pressuring USD/CAD to dip below key 1.3000 psychological support on Tuesday.
- Canada’s Gross Domestic Product (GDP) for November 2016 reported better-than-expected at +0.4% against forecast of +0.3%. Canadian dollar surged, pressuring USD/CAD to dip below key 1.3000 psychological support on Tuesday.
- USD/CAD also pressured by US dollar’s continued weakening on Tuesday, driven partly by US protectionist stance and Trump Administration “talking down” the dollar while boosting “grossly undervalued” euro.
- Crude oil prices in flux but still currently supported on strength of December’s output cut deal among major OPEC/non-OPEC oil producers. Support for crude oil generally lends a measure of support for oil-linked Canadian dollar.
- Bank of Canada recently stated that a rate cut was still “on the table,” partly due to Trump’s protectionist stance and expected renegotiation or dissolution of the North American Free Trade Agreement (NAFTA).
- Federal Reserve policy decision on Wednesday will help determine near-term direction for the US dollar when the Fed reveals its current interest rate outlook in view of the new Trump Administration’s fiscal stimulus plans.
- Friday’s US jobs report will also be a major driver of short-term US dollar direction. Current forecast: 170,000 jobs added in January.
- USD/CAD fluctuating around critical 1.3000 support juncture ahead of Fed decision and US jobs report. A US dollar rebound from this support on a hawkish Fed and/or better-than-expected jobs data could lead to a USD/CAD upsurge, potentially towards the 1.3400 intermediate resistance target. Any sustained breakdown below 1.3000 on further US dollar weakness should target key support to the downside at 1.2800.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.