USD/CAD – Little Change as Markets Eye G-20 Meeting

USD/CAD is keeping a low profile, as the pair slightly above the parity level. The Canadian dollar posted some gains on Tuesday, but was unable to push above parity. In the US, the Federal Budget Balance looked good, as the US government posted a rare surplus for January. Today’s highlights are from the US, which will release Retail Sales and Core Retail Sales later in the day. There are no Canadian releases scheduled for Wednesday.

In the US, the markets were pleasantly surprised as the Federal Budget Balance easily exceeded the estimate, and posted a surplus of $2.9 billion. The markets had anticipated a deficit of $4.6 billion. US Retail Sales and Core Retail Sales, both key indicators, posted very weak gains. Retail Sales rose 0.1%, matching the forecast. Core Retail Sales gave a similar performance, gaining 0.2.%. The estimate stood at 0.1%. Analysts blamed the weak data on recent tax increases and higher gasoline prices. This could signal decreased consumer spending, which would be bad news for the fragile US recovery.

The G-20 finance ministers meet in Moscow later this week, and an important topic on the agenda will be the issue of exchange rates, with the euro posting sharp against the yen and the dollar. There is mounting concern about “currency wars”, as countries are increasingly relying on monetary policy to kick-start their flagging economies. The Institute of International Finance, which is comprised of leading banks and financial institutions, has urged the G-20 to take steps to avoid the “possible discord on exchange rates”. The G-7 also weighed in on the matter, and reiterated its commitment to market-determined exchange rates. Japan’s trading partners are alarmed by the sinking yen, but the Japanese government has been brushing off international criticism of its monetary policies. Japanese Finance Minister Taro Aso stated that the monetary easing measures are needed to deal with deflation and the government has not actively devalued the yen. Anyone expecting fireworks at the G-20 over currency manipulations is likely to be disappointed – given the need to reach a consensus, analysts expect any statement on currencies to be mild in nature.

 

USD/CAD for Wednesday, February 13, 2013

Forex Rate Graph Wednesday, February 13, 2013

USD/CAD February 13 at 14:05 GMT

1.0029 H: 1.0044 L: 1.0015

 

S3 S2 S1 R1 R2 R3
0.9898 0.9954 1.00 1.0041 1.01 1.0157

 

US/CAD is trading in a narrow range, close to the parity line. The pair is receiving support at parity which has remained intact since last week. There is stronger support at 0.9954. On the upside, the pair is facing resistance at 1.0041. This line is a weak line, and could see activity if the US dollar shows any strength. This is followed by resistance at the round number of 1.01.

Further levels in both directions:

  • Below: 1.00, 0.9954, 0.9898, 0.9833 and 0.9809
  • Above: 1.0041, 1.01, 1.0157, 1.0207 and 1.0286

 

OANDA’s Open Position Ratios

The USD/CAD ratio continues to point to movement towards short positions. The Candian dollar did post some gains on Tuesday, but the pair has been very quiet in Wednesday trading. Will the pair take its cue from the ratio, and turn south? If so, we could see the loonie once again on top of the parity level.

USD/CAD is quiet, trading close to the parity line. US retail sales data was a non-event for the pair, as both indicators came within market expectations. With no Candian releases until Friday, we could be in for more narrow range trading.

 

USD/CAD Fundamentals

  • 2:00 US President Obama delivers State of the Union Address.
  • 13:30 US Core Retail Sales. Estimate 0.1%. Actual 0.2%.
  • 13:30 US Retail Sales. Estimate 0.1%. Acutal 0.1%.
  • 13:30 US Import Prices. Estimate 0.8%. Actual 0.6%.
  • 15:00 US Treasury Secretary Jack Lew Speaks.
  • 15:00 US Business Inventories. Estimate 0.3%.
  • 15:30 US Crude Oil Inventories. Estimate 2.4M.
  • 16:10 US FOMC Member James Bullard Speaks.
  • 18:00 US 10-year Bond Auction.

 

*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.