USD/CAD – Little Movement On Mixed US Mfg. Data

USD/CAD is showing little movement in Monday trading, as the pair trades in the high-1.05 range. In economic news, Canadian Foreign Securities Purchases dropped sharply, while the US posted mixed releases from the manufacturing sector. The Empire State Manufacturing Index was well short of the estimate, while Industrial Production posted its sharpest gain in 2013.

Canadian releases have started off the week in poor fashion, as Foreign Securities took a tumble. The indicator dropped to 4.41 billion dollars in November, sharply down from 8.36 billion a month earlier. The markets had expected much better news, with an estimate of 9.24 billion. The indicator is closely linked to currency demand, as foreigners need to purchase Canadian dollars in order to buy domestic securities.

Over in the US, Monday’s manufacturing releases were a mix. The Empire State Manufacturing Index pushed back above the zero level, but still fell short of the estimate of 4.9 points. Industrial Production looked much sharper, posting a strong gain of 1.1% in November. This was the strongest showing we’ve seen from the indicator since November 2012.

There was some good news on the fiscal front, as the US House of Representatives easily passed a budget deal on Thursday. The agreement, which will be voted on by the Senate next week, will remove the risk of a government shutdown and reduces the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty we’ve seen in recent months.

US employment numbers have generally been solid recently, although last week’s disappointed, posting a nine-week high.  The Fed has said that a stronger employment picture is a prerequisite to tapering, and there is speculation that the Fed could make a move this week, although there’s a greater likelihood that we won’t see a taper until early next year. Still, the two-day Fed policy meeting, which begins on Tuesday, is the event of the week and will be closely monitored by the markets. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper would likely boost the US dollar against the major currencies.

 

USD/CAD for Monday, December 16, 2013

Forex Rate Graph 21/1/13

USD/CAD December 16 at 15:25 GMT

USD/CAD 1.0583 H: 1.0594 L: 1.0575

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0442 1.0502 1.0573 1.0652 1.0783 1.0852

 

  • USD/CAD is showing little movement in Monday trading, as the pair is within striking distance of the 1.06 line.
  • On the upside, 1.0652 is providing resistance. This is followed by a resistance line at 1.0783, which has remained intact since November 2009.
  • 1.0573 continues to provide support. This is a weak line which could break if the Canadian dollar shows any upward movement. This 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 and 1.0337
  • Above 1.0652, 1.0783, 1.0852, 1.0945 and 1.10

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions in Monday trading. This is not reflected in the current movement of the pair, which h is showing little activity. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar posting gains against the US currency.

It’s been a very quiet start to the trading week for USD/CAD, and with no major releases on the schedule, we could continue to see subdued activity from the pair during the North American session.

 

USD/CAD Fundamentals

  • 13:30 Canadian Foreign Securities Purchases. Estimate 9.24B. Actual 4.41B.
  • 13:30 US Empire State Manufacturing Index. Estimate 4.9 points. Actual 1.0 points.
  • 13:30 US Revised Nonfarm Productivity. Estimate 2.9%. Actual 3.0%.
  • 13:30 US Revised Unit Labor Costs. Estimate -1.5%. Actual -1.4%.
  • 14:00 US Flash Manufacturing PMI. Estimate 54.9 points. Actual 54.4 points.
  • 14:00 US TIC Long-Term Purchases. Estimate 31.4B. Actual 35.4B.
  • 14:15 US Capacity Utilization Rate. Estimate 78.5%. Actual 79.0%.
  • 14:15 US Industrial Production. Estimate 0.6%. Actual 1.1%.

 

*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.