USD/CAD – Rally Continues As Loonie Drops to Three-Year Lows

The Canadian dollar continues to lose ground in Tuesday trading, as USD/CAD trades in the mid-1.06 range. The Canadian currency continues to struggle and has now lost over 200 points in the past two weeks against its US cousin. It’s a very light schedule on Tuesday, with just two minor US releases on the calendar. There are no Canadian releases on Tuesday.

Nothing seems to be going right for the beleaguered Canadian dollar. 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 three-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 this week 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 more ground.

 

USD/CAD for Tuesday, December 3, 2013

Forex Rate Graph 21/1/13

USD/CAD December 3 at 15:40 GMT

USD/CAD 1.0664 H: 1.0673 L: 1.0632

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0502 1.0573 1.0652 1.0783 1.0852 1.0945

 

  • USD/CAD continues to post gains. The pair has touched a high of 1.0673 in the North American session, as the Canadian dollar remains under strong pressure.
  • On the upside, the pair is facing resistance at 1.0783. This is followed by a resistance line at 1.0852, which has held firm since November 2009.
  • 1.0652 has reverted to a support level. This weak line could face pressure during the North American session. This is followed by support at 1.0573.
  • Current range: 1.0652 to 1.0783

 

Further levels in both directions:

  • Below: 1.0652, 1.0573, 1.0502, 1.0442 and 1.0337
  • Above 1.0783, 1.0852, 1.0945 and 1.10

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to movement towards long positions on Tuesday, continuing the pattern we saw on Monday. 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 the greenback enjoying strong upward momentum, we could see the pair continue to post gains in the North American session.

 

USD/CAD Fundamentals

  • 15:00 US IBD/TIPP Economic Optimism. Estimate 43.2 points. Actual 43.1 points.
  • All Day – US Total Vehicle Sales. Estimate 15.8M.

 

*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.