USD/CAD – Loonie Pushes, But Parity Still Elusive

USD/CAD continues to exhibit narrow range trading in Thursday’s session. The Canadian dollar is testing the parity line, but has not been able to cross the all-important threshold. In the US, Unemployment Claims bounced back, easily beating the estimate. There are no Canadian releases scheduled for Thursday. The G-20 will be meeting in Moscow on Friday, and a hot topic on the agenda will be currency rates.

The markets cheered today’s major release, as US Unemployment Claims roared back after two back-to-back weak readings. There were 341,000 new claims, a sharp drop from the previous release. This week’s estimate stood at 361 thousand. The Canadian dollar is testing the parity line, but has been unable to break through. The pair has been close to parity for most of February, and has been unable to sustain much momentum in either direction. Will the loonie make a sharp dash and push above parity?

The markets are keeping an eye on the G-20 meeting, which begins on Friday. An important topic on the agenda will be the issue of exchange rates. There is mounting concern about currency wars, and Japan is coming under strong criticism for increasingly relying on monetary policy to kick-start its economy. The G-7, clearly concerned about the falling Japanese yen, reiterated its commitment to allowing the markets to determine exchange rates. The Institute of International Finance, which is comprised of leading banks and financial institutions, also weighed in on the matter. It urged the G-20 to take steps to avoid the “possible discord on exchange rates”. For its part, the Japanese government has defended its monetary policy, stating that its aggressive easing steps have been taken to combat deflation, and it has not actively devalued the yen. Japan’s trading partners may beg to differ, but we’re unlikely to see any fireworks at the G-20 over this matter. Given the need to reach a consensus, analysts expect any statement on currencies from the G-20 to be mild in nature.

USD/CAD for Thursday, February 14, 2013

USD/CAD February 14 at 15:00 GMT

1.0014 H: 1.0025 L: 1.0004

USD/CAD Technical

USD/CAD continues the trend, trading in a narrow range, close to the parity line. The proximate support and resistance lines remain in place (S1 and R1 above). The pair is receiving support at parity, which has held solid since last week, when the US dollar showed some strength. 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 pair can sustain some upward movement. This is followed by strong resistance at the round number of 1.01.

• Current range: 1.00 to 1.0041

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 has again shifted direction, as there is movement towards long positions. The pair continues to be boxed in, with the loonie putting strong pressure on the parity line. The movement in the ratio suggests that we could see the US dollar push back and make inroads against the Canadian currency. 

USD/CAD continues to be subdued trading close to the parity line. The loonie is pushing hard, but has been unable to regain command of the parity line. We can expect the pair to continue to stick close to parity. Friday sees the release of some important data from both countries, and we could see some movement if the readings are not in line with market expectations.

USD/CAD Fundamentals 

•  13:30 US Unemployment Claims. Estimate 361K. Actual 341K.
• 15:30 US FOMC Member Daniel Tarullo Speaks.
• 15:30 US Natural Gas Storage. Estimate -166B.
• 17:50 US FOMC Member James Bullard Speaks.
• 18:00 US 30-year Bond Auction.

*Key releases are highlighted in bold

*All release times are GMT

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