USD/CAD has shown very little movement so far this week, and the trend is continuing in Wednesday trading. Early in the North American session, the pair is trading just below the 1.05 line. Taking a look at economic releases, Wednesday has a very light schedule, with just two releases. Today’s key event was US Pending Home Sales, which posted a second straight decline and was well short of expectations. There are no Canadian releases on Wednesday.
US numbers have been pointing in all directions this week. On Wednesday, the news was not good as Pending Home Sales declined 1.1%, a seven-month low for the key housing indicator. This was well off the estimate of a 0.2% gain. The week started off poorly, as Core Durable Goods Orders and Durable Goods Orders both posted declines. There was better news from the manufacturing sector on Tuesday, as the Richmond Manufacturing Index soared in August and posted its highest level in over a year. CB Consumer Confidence looked very sharp, with its best showing since January 2008. The mixed data could mean that the Federal Reserve will be inclined to delay QE tapering until US economic numbers improve.
The US Federal Reserve has been tightlipped about when it might taper QE, but the recent Jackson Hole summit provided a glimpse of the divisions in the Fed as to when it might act. Fed chair Bernard Bernanke was a no-show at the summit, giving other policymakers an opportunity to express their views on QE. Dennis Lockhart, head of the Atlanta Fed, said that tapering could start in September, but only if US data justified such a move. There was a more hawkish statement from James Bullard, head of the St. Louis Fed. Bullard said that there was no need for the Fed to rush into QE tapering. The uncertainty over QE tapering has buoyed the US dollar, raised the yields on US treasury bonds and led nervous investors to pull billions of dollars out of emerging markets. With September just around the corner, we could see strong volatility in the markets as speculation over QE heats up.
USD/CAD for Wednesday, August 28, 2013
USD/CAD 1.05o9 H: 1.0540 L: 1.0501
- USD/CAD is showing little movement in Wednesday trading. The pair touched a high of 1.0512 in the European session but has then retracted below the 1.05 level.
- 1.0502 is a weak resistance line and could be tested during the day. This is followed by resistance at 1.0573.
- 1.0442 is providing support. This line is not strong and cannot be considered safe. This is followed by support at 1.0337.
- Current range: 1.0442 to 1.0502
Further levels in both directions:
- Below: 1.0442, 1.0337 and 1.0282
- Above 1.0502, 1.0573, 1.0652, 1.0758 and 1.0888
OANDA’s Open Positions Ratio
USD/CAD ratio is pointing to movement towards short positions in Wednesday trading. This is reflected in the current movement of the pair, as the pair has dropped below the 1.05 line.
The Canadian dollar has posted modest gains on Wednesday, as the pair trades in the high-1.04 range. With a weak housing release out of the US, we could see the loonie post some more slight gains during the North American session.
- 14:00 US Pending Home Sales. Estimate 0.2%. Actual -1.3%.
- 14:30 US Crude Oil Inventories. Estimate 0.5M. Actual 3.0M.
*Key releases are highlighted in bold
*All release times are GMT