FxWirePro: Uphold Longs in USD/CAD Ahead of Canadian Trade Balance

Canada has scheduled for the trade balance data announcement this week, Canada’s merchandise trade deficit narrowed to CAD 4.25 billion in January 2019 from an upwardly revised all-time high CAD 4.82 billion in the previous month and compared with market expectations of a CAD 3.5 billion shortfalls. It was the second largest trade gap on record. Exports rose 2.9 percent, the first increase since July, mainly on the strength of higher crude oil export prices and imports increased at a softer 1.5 percent, led by aircraft purchases.

USDCAD had traded firmly lower in the wake of the stronger-than-expected January GDP print from last week and has subsequently seen the largest pickup in short-end rates in G10 this week. Still, CAD failed to trade materially stronger with the host of risk-positive drivers that permeated throughout the week, including a +4.5% gain in oil. 

This underscores that more timely economic indicators like Canada’s Markit manufacturing PMI continue to underwhelm, and payrolls this morning contracted for the first time since August. The BoC’s Business Outlook Survey on April 15 will be a useful gauge. 

Trade tips: 

Activated longs in USDCAD at 1.3364 at the beginning of March 5th. Marked at 0.25%. 

Activated longs in a -3m/+7m OT USDCAD calendar call spread (k=1.40) for 16.70% in mid-January. Marked at 19.39%.

Currency Strength Index: FxWirePro's hourly CAD spot index is flashing at 85 (which is bullish), while hourly USD spot index was at 24 (mildly bullish) while articulating at 10:36 GMT. 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex