USD/CAD – Markets Await Key US Releases

USD/CAD is steady in Friday’s European session, as the pair trades in the low-1.01 range. The Canadian posted some modest gains following strong US employment numbers, but has coughed up some of those gains on Friday. We could see some volatility from the pair today, as the US makes up for a quiet week with four key releases – Core Retail Sales, Retail Sales, PPI and UoM Consumer Sentiment. In addition, Fed Chairman Bernanke will deliver remarks at a conference in Washington. There are no Canadian releases on Friday, wrapping up a very quiet week north of the border.

After two straight weeks of dismal releases, the US finally broke out of the slump on Thursday. Unemployment Claims rebounded nicely, dropping from 385 thousand new claims to just 346 thousand. This easily beat the estimate of 354 thousand. The bad US numbers came from a wide section of the economy, and the markets are hoping that the worst is behind us. Friday should provide a good test, as the US posts four major releases. Strong numbers will boost markets sentiment, but additional figures off the mark are sure to raise red flags about the extent of the recovery.

The Federal Open Market Committee released its meeting minutes on Wednesday, and the most exciting thing about the release was that it was leaked several hours ahead of schedule. The Federal Reserve was not amused, and has ordered an investigation into the matter. The minutes themselves turned out to be a non-event, with policymakers divided as to the extent and duration of the current round of QE. Some members wanted to wind down the program in the middle of 2013, while others felt it was more appropriate to wait until the end of the year. There was also discussion about whether to decrease the amount of asset purchases immediately, or continue the present levels until the end of the year. The division in opinion reflects uncertainty over the extent of the US recovery and the health of the economy. With the US reeling off a host of poor releases throughout April, FOMC members might have had a different take on the QE program had the meeting taken place in April rather than March.

In Japan, the central bank has wasted little time in implementing further easing steps, as the BOJ began purchasing Japanese government bonds earlier this week. The aggressive monetary policy announced by the BOJ has rattled the yen, which is very close to the 100 mark. However, the Canadian dollar has been able to take advantage of the situation, as the BOJ’s easing measures have increased investor demand for higher yielding assets, such as the Canadian currency.

USD/CAD for Friday, April 12, 2013

1.0118 H: 1.0127 L: 1.0094

USD/CAD Technical

USD/CAD is not showing a lot of movement, and the proximate resistance and support levels remain in place (R1 and S1 above). The pair is receiving support at the round number 1.01. This is a weak line, and was briefly breached  earlier today. There is stronger support at 1.0041. This line is protecting the parity level. On the upside, there is resistance at 1.0157. This is followed by a resistance line at 1.0229, which has held firm since late March.

• Current range: 1.01 to 1.0157.

Further levels in both directions:

• Below: 1.01, 1.0041, 1.00 and 99.46
• Above: 1.0157, 1.0229, 1.0282, 1.0361 and 1.0446

OANDA’s Open Position Ratios

USD/CAD ratio is showing little movement in Friday trading. This is consistent with what we are seeing from the pair, which is trading quietly, close to the 1.01 line. Traders should keep an eye on the ratio, as increased movement could be an early indication that USD/CAD will show increased activity.

USD/CAD is trading quietly, but that could change in the North American session, as the US releases a host of data, including four key events. We could see some volatility from the pair if today’s numbers are not consistent with market expectations.

USD/CAD Fundamentals

• 12:30 US Core Retail Sales. Exp. -0.1%.
• 12:30 US PPI. Exp. -0.2%.
• 12:30 US Retail Sales. Exp. 0.0%.
• 12:30 US Core PPI. Exp. 0.2%.
• 12:45 US FOMC Member Eric Rosengren Speaks.
• 13:55 US Preliminary UoM Consumer Sentiment. Exp. 79.1 points.
• 13:55 US Preliminary UoM Inflation Expectations.
• 14:00 US Business Inventories. Exp. 0.4%.
• 16:30 Fed Chairman Bernard Bernanke Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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