USD/CAD churns on Thursday after US CPIs and Canadian Retail Sales spread on forecasts
- Markets churned on Thursday after mixed US PMI figures.
- Canada’s Retail Sales also spread.
- Friday to wrap up the week with Fed’s Monetary Policy Report.
USD/CAD drifted into the low end early Thursday as markets geared up for the day’s US Purchasing Managers Index (PMI) print. Mixed results left markets a little less confident, and the pair traveled notable ground to wind up close to flat on the day.
Canada saw a similar mixed result in its Retail Sales figures, with sales volumes excluding automobiles coming in below expectations. Next up on the economic calendar will be Friday’s Monetary Policy Report from the Federal Reserve (Fed), but little of note is expected within the report itself following the Fed’s latest meeting Minutes released on Wednesday.
Daily digest market movers: USD/CAD churns and burns as data prints spread
- Canadian Retail Sales rose 0.9% in December compared to the forecast of 0.8%, rebounding from the previous month’s 0.0%.
- Canadian Retail Sales excluding Autos also rose but by a more sedate 0.6%, missing the 0.7% forecast but recovering from the previous -0.4%.
- US Initial Jobless Claims for the week ended February 16 declined to 201K, coming in well below the 4-week average of 215.25K and even further away from the forecast of 218K. The previous week saw 213K (revised from 212K) new jobless benefits applicants.
- The S&P Global PMIs for February in the US were mixed with Services underperforming but the Manufacturing sector gaining further ground as producers look hopeful they will avoid a recession.
- The Services component printed at 51.3 MoM versus the forecast 52.0, falling back from the previous month’s 52.5, while the Manufacturing component rose to 51.5 compared to the forecast 50.5 and January’s 50.7.
- US Existing Home Sales also rose in January with Existing Home Sales Change climbing 3.1% MoM, recovering from the previous -0.8% (revised up from -1.0%).
- Read More: US S&P Global Manufacturing PMI improves to 51.5
Canadian Dollar price today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.05% | 0.00% | -0.02% | 0.13% | 0.11% | -0.09% | 0.24% | |
| EUR | -0.03% | -0.05% | -0.08% | 0.09% | 0.09% | -0.12% | 0.20% | |
| GBP | 0.00% | 0.05% | -0.02% | 0.13% | 0.12% | -0.07% | 0.24% | |
| CAD | 0.00% | 0.07% | 0.02% | 0.15% | 0.16% | -0.04% | 0.28% | |
| AUD | -0.11% | -0.08% | -0.12% | -0.14% | -0.01% | -0.19% | 0.13% | |
| JPY | -0.11% | -0.08% | -0.11% | -0.14% | -0.02% | -0.20% | 0.14% | |
| NZD | 0.09% | 0.12% | 0.07% | 0.04% | 0.20% | 0.20% | 0.32% | |
| CHF | -0.25% | -0.21% | -0.26% | -0.28% | -0.13% | -0.13% | -0.33% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Technical analysis: USD/CAD falls back into near-term lows but then recovers to 1.3500
USD/CAD backslid into a prime buying area early Thursday, settling into 1.3440 before staging a recovery. The pair knocked back into 1.3510 as it remains lashed firmly to the 1.3500 handle in the near term. The day’s dip into a heavy supply zone also saw an intraday Fair Value Gap (FFVG) form between 1.3480 and 1.3455, which got filled almost immediately and set the stage for further gains provided the market’s change of character holds through the end of the week.
With Thursday’s down-and-up action on the USD/CAD, the pair is catching firm technical support from the 200-day Simple Moving Average (SMA) at 1.3478. A pattern of higher highs is dragging the pair further into bull country as the USD/CAD recovers from December’s lows at 1.3177.
USD/CAD hourly chart
USD/CAD daily chart
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.