USD/CAD – Little Movement as Pair Trades Near Parity

USD/CAD continues to show little activity, with the pair trading slightly below the parity line. The US dollar has made some moves towards parity, but these have not had much momentum. Currently the pair is trading in the 0.9980 range. In the US, the manufacturing sector continues to struggle, as Factory Orders fell well below the market estimate. The markets will be paying close attention to Tuesday’s key release, ISM Non-Manufacturing PMI. There are no Canadian releases scheduled for Tuesday.

There are no Canadian releases until Wednesday, but things promise to get busy with a host of key Canadian releases. These include PMI, construction and employment data. The markets are keeping expectations low with regard to Employment Change, despite outstanding numbers in the past two releases. There is a widely-held view that these strong numbers do not conform with other key indicators, which point to a slowing down of the Canadian economy. Core Retail Sales numbers were below expectations, while January’s Building Permits was a disaster, plunging over 17%. Analysts are bracing for weaker employment numbers in February, pointing to a sharp decline in the employment index of the most recent Ivey PMI. If Canadian employment numbers do slide later this week, this could raise concerns about the strength of the economy, and we could see the loonie lose some ground.

Care to hazard a guess as to where the US economy is headed? US economic numbers continues to keep the markets guessing about the extent of the US recovery. The recent GDP release was a major disappointment, as the economy contracted for the first time since 2009. Employment numbers lost their recent shine, as NFP and Unemployment Claims failed to meet expectations, and the unemployment rate inched up to 7.9%. On the bright side, consumer sentiment and manufacturing data have been solid. UoM Consumer Sentiment climbed to 73.8 points, well above the estimate. ISM Manufacturing PMI also was sharp, posting an eight-month high. With only a handful of key US releases this week, each one will find itself under the market microscope as the markets try to get a handle on the health of the US economy. Tuesday’s key release is ISM Non-Manufacturing PMI. This index has looked solid in recent readings, and the markets will be hoping for more good news later today.

 

USD/CAD for Tuesday, February 5, 2013

Forex Rate Graph 5/2/13

USD/CAD February 5 at 14:00 GMT

0.9984 H: 0.9994 L: 0.9972

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
0.9833 0.9898 0.9954 1.0003 1.0041 1.01

 

USD/CAD continues to trade slightly below the parity line. The pair remains boxed in a narrow range, as the proximate support and resistance lines remain in place. The pair faces continues to face resistance just above parity, at 1.0003. This is a weak line, and could face pressure if the greenback is able to sustain any momentum towards parity. This is followed by resistance at 1.0041. On the downside, the pair continues to receive support at 0.9954. The line of 0.9898 is a stronger support level.

Current range: 99.54 to 1.0003.

Further levels in both directions:

  • Below: 0.9954, 0.9898, 0.9833, 0.9809 and 0.9767.
  • Above: 1.0003, 1.0041, 1.01, 1.0157, 1.0207, 1.0286, 1.0365 and 1.0443.

 

OANDA’s Open Position Ratios

USD/CAD ratio continues to indicate movement towards long positions. We have not seen this reflected in the currency pair, which continues to trade in a narrow range just below the parity line. Most open positions are in the long position camp, indicating that trader sentiment is biased towards an upward move by the US dollar against its Canadian counterpart. Will we see the pair break out and show some upward movement?

It’s been a very quiet couple of days for USD/CAD. The pair continues to stick close to the parity line, unable to sustain any momentum is either direction. This narrow range trading could continue, with only one major release scheduled for Tuesday.

 

USD/CAD Fundamentals

  • 13:30 US FOMC Member Elizabeth Duke Speaks.
  • 15:00 US ISM Non-Manufacturing PMI. Estimate 55.2 points.
  • 15:00 US IBD/TIPP Economic Optimism. Estimate 46.1 points.

 

*Key releases are highlighted in bold

*All release times are GMT

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.