USD/CAD – Edges Higher As Manufacturing PMI Improves

The Canadian dollar continues to lose ground as we begin the new trading week. USD/CAD has edged higher in Monday trading, as the pair trades in the mid-1.06 range. The Canadian currency continues to struggle and has now lost about 200 points in the past two weeks. In economic news, the ISM Manufacturing PMI looked sharp, climbing to its highest level since April 2011. As well, Federal Chair Bernard Bernanke spoke at an event in Washington. There are no releases out of Canada on Monday.

On Friday, Canadian GDP remained unchanged, posting a second straight gain of 0.3%. This beat the estimate of 0.1%, but the positive reading wasn’t enough to prevent the loonie from losing more ground, as the USD/CAD rally continued. Even with the strong GDP release, market sentiment has not been strong around the Canadian dollar, which has fallen to two-year lows against the US currency. The Bank of Canada will set the benchmark interest rate on Wednesday, and the markets are anticipating that Bank will maintain the current level of 1.00%.

US releases got off to a fast start as ISM Manufacturing PMI jumped to 57.3 points, up from 56.4 the month before. This beat the estimate of 55.2 and was the index’s best showing since April 2011. The markets will be keeping close tabs on this week’s US employment releases, as the Fed is likely to step in and taper QE if employment numbers continue to improve. Unemployment Claims have looked sharp for the past two releases, and if the Non-Farm Payrolls and Unemployment Rate look solid, this week, the US dollar could gain ground.

USD/CAD for Monday, December 2, 2013

USD/CAD December 2 at 15:25 GMT

USD/CAD 1.0638 H: 1.0654 L: 1.0614

USD/CAD Technical

• USD/CAD has edged higher on Monday, as the proximate support and resistance levels (S1 and R1 above) remain intact.
• On the upside, the pair is facing resistance at 1.0652. This weak line could be tested if the US dollar continues to move upwards. This is followed by a resistance line at 1.0783, which has held firm since May 2010.
• The pair continues to receive support at 1.0573. This weak line could face pressure during the North American session. This line is followed by support at 1.0502, which is protecting the 1.05 line.
• Current range: 1.0573 to 1.0652

Further levels in both directions:

• Below: 1.0573, 1.0502, 1.0442, 1.0337 and 1.0282
• Above 1.0652, 1.0837 and 1.0945 and 1.10

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to movement towards long positions in Monday trading. This is reflected in the current movement of the pair, as the US dollar continues to point upwards. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar reversing its downward spiral and moving to higher ground.

The Canadian dollar remains under pressure as it trades in the mid-1.06 range. With Monday’s US PMI showing a solid rise, we could see the pair post further gains during the day.

USD/CAD Fundamentals

• 13:30 Fed Chairman Bernard Bernanke Speaks.
• 14:00 US Final Manufacturing PMI. Estimate 54.3 points. Actual 54.7 points.
• Sep. Data – US Construction Spending. Estimate 0.5%. Actual -0.3%.
• 15:00 US ISM Manufacturing PMI. Estimate 55.2 points. Actual 57.3 points.
• 15:00 US Construction Spending. Estimate 0.4%. Actual 0.8%.
• 15:00 US ISM Manufacturing Prices. Estimate  55.0 points. Actual 52.5 points.

*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.