USD/CAD – Rangebound As US Key Releases Falter

The Canadian dollar is almost unchanged in Tuesday trading. The pair continues to trade in the mid-1.04 range in the Tuesday’s North American session. In economic news, it was another rough day for US releases, as PPI, Retail Sales and CB Consumer Confidence all missed their estimates. Core Retail Sales was the lone bright spot, as it matched the forecast. As well, the Federal Reserve meets for a two-day policy meeting which begins on Tuesday. In Canada, inflation indicators continue to look weak, as both the Raw Materials Price Index and Industrial Product Price Index posted declines in September. Later on Tuesday, BOC Governor Stephen Poloz testifies before the House of Commons Standing Committee in Ottawa.

In the US, the grim readings continued on Tuesday. PPI and Retail Sales both declined by 0.1%, missing the estimate of 0.2%. CB Consumer Confidence dropped sharply, from 79.7 to 71.2 points, a six-month low. This was well short of the estimate of 75.7 points. Core Retail Sales managed to match the forecast, rising to 0.4%. The mostly weak figures come on the heels of dismal housing numbers on Monday. If confidence in the US economy starts to weaken, we could see the dollar, which is already under pressure from the major currencies, lose ground.

In Canada, inflation continues to be very weak. The Raw Materials Price Index fell 1.5%, a five-month low. This was well below the estimate of -0.4%. The Industrial Product Price Index posted a decline of -0.3%, falling short of the estimate of a 0.2% gain. This was its lowest reading since April. These readings point to weak economic activity, as the Canadian economy continues to struggle, as does the Canadian dollar.

The markets are carefully monitoring the FOMC policy meeting, which began on Tuesday. Federal Reserve policymakers have indicated that the Fed is unlikely to taper QE in 2013, and weak US releases will only reinforce this sentiment, and tapering could be on hold to March or April of next year. As tapering is bullish for the dollar, lack of action by the Fed will continue to weigh on the struggling dollar.

USD/CAD for Tuesday, October 29, 2013

USD/CAD October 29 at 15:00 GMT

USD/CAD 1.0439 H: 1.0455 L: 1.0428

USD/CAD Technical

• USD/CAD is almost unchanged in Tuesday trading.
• The pair is testing resistance at 1.0442. This line could fall if the Canadian dollar loses any ground. There is stronger resistance at 1.0502.
• USD/CAD is receiving support at 1.0337. This line has some breathing room as USD/CAD trades above the 1.04 line. This is followed by a support level at 1.0282.
• Current range: 1.0337 to 1.0442

Further levels in both directions:

• Below: 1.0337, 1.0282, 1.0224, 1.0158 and 1.0068
• Above 1.0442, 1.0502, 1.0573 and 1.0652

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in Tuesday trading. This is reflected in the movement of the pair, which is rangebound. We are now seeing a majority of short positions in the ratio, indicating a bias towards the Canadian dollar moving higher.

The Canadian dollar remains under pressure from the greenback. USD/CAD shrugged off weak US and Canadian numbers earlier in the day, so we could see the drifting continue in the North American session.

USD/CAD Fundamentals

• 12:30 Canadian Raw Materials Price Index. Estimate -0.4%. Actual -1.5%.
• 12:30 Canadian Industrial Product Price Index. Estimate 0.2%. Actual -0.3%.
• 12:30 US Core Retail Sales. Exp. 0.4%. Actual 0.4%.
• 12:30 US PPI. Exp. 0.2%. Actual -0.1%.
• 12:30 US Retail Sales. Exp. 0.2%. Actual -0.1%.
• 12:30 US Core PPI. Exp. 0.1%. Actual 0.1%.
• 13:00 US S&P/CS Composite-20 HPI. Exp. 12.4%. Actual 12.8%.
• 14:00 US CB Consumer Confidence. Exp. 75.2 points. Actual 71.2 points.
• 14:00 US Business Inventories. Exp. 0.3%. Actual 0.3%.

*Key releases are highlighted in bold

*All release times are GMT

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