USD/CAD – Loonie Under Pressure As US Housing Data Falters

The Canadian dollar has steadied but remains under pressure on Monday. In the North American session, USD/CAD is trading in the mid-1.05 range and has shown some movement close to the 1.06 level. On Friday, Canadian inflation and retail sales numbers were mixed. it’s a quiet start to the week. The sole US release looked weak, as Pending Home Sales posted its fifth consecutive decline. The key indicator dropped by 0.6%, way off the estimate of a 2.2% gain. There are no Canadian releases on Monday.

Canada released inflation and retail sales numbers on Friday, and the mixed numbers didn’t prevent the Canadian dollar from losing more ground against the US currency. Core CPI posted a small gain of 0.2% for the third straight month, while CPI disappointed with a decline of 0.2%. Core Retail Sales posted a flat figure of 0.0%,  a three-month low. There was better news from Retail Sales, which jumped 1.0%, its best showing in four months. This easily beat the estimate of 0.3%.

Last week, there was positive news on the US employment front, as Unemployment Claims dropped to 323 thousand, a seven-week low. This was well below the estimate of 333 thousand. The strong figure will likely increase speculation as to when the Fed will step in and taper QE, although such a dramatic move is not considered likely before early 2014.

Low inflation indicators have been a major concern in Japan and the Eurozone, and the US economy is not immune from this problem. The Producer Price Index continues to look weak, posting a decline of 0.2% in October. This was the index’s second straight decline. Core CPI showed a weak gain of 0.1%, and CPI dipped to -0.1%. These weak numbers point to slow economic activity and slow economic growth in the US.

 

USD/CAD for Monday, November 25, 2013

Forex Rate Graph 21/1/13

USD/CAD November 25 at 15:30 GMT

USD/CAD 1.0551 H: 1.0583 L: 1.0540

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0337 1.0442 1.0502 1.0573 1.0652 1.0837

 

  • USD/CAD is steady in Monday trading. The pair touched a high of 1.0583 as the Canadian dollar remains under pressure.
  • On the upside, the pair continues to face resistance at 1.0573. This is followed by a resistance line at 1.0652, which has held firm since October 2011.
  • The pair is receiving support at 1.0502. This is followed by a support line at 1.0442, which has been busy throughout November.
  • Current range: 1.0502 to 1.0573

 

Further levels in both directions:

  • Below: 1.0502, 1.0442, 1.0337, 1.0282, 1.0224 and 1.0158
  • Above 1.0573, 1.0652 and 1.0837 and 1.0945

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions in Monday trading. This is not reflected in the current movement of the pair, as the US dollar has posted slight gains against the Canadian currency. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar reversing its current slide and moving to higher ground.

The Canadian dollar continues to lose ground against its US counterpart. Will USD/CAD push above the 1.06 level? With the pair showing no reaction to the day’s only release,  it could be an uneventful North American session.

 

USD/CAD Fundamentals

15:00 US Pending Home Sales. Estimate 2.2%.

 

*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.