The Canadian dollar is trading just shy of the 1.07 line in Monday trading, as the US dollar continues to pressure the Canadian currency. In economic releases, it’s a very quiet start to the week, with just one release – US Pending Home Sales. After a host of declines from the key housing indicator, the markets are expecting a solid gain for the November reading. There are no Canadian releases this week.
US Unemployment Claims dropped sharply on Thursday. The indicator fell to 338 thousand, down from 379 thousand in the previous release. The estimate stood at 346 thousand. The sharp reading was a dramatic reversal from numbers over the past two weeks, which were much higher than the forecast. With the Federal Reserve poised to begin its long-awaited QE taper next month, employment releases have taken on added significance. If the labor market continues to improve, we are likely to see further QE reductions, which would give a boost to the US dollar against its major rivals.
There was some holiday cheer from US releases last week, as manufacturing and housing numbers pointed upwards. Core Durable Goods Orders posted a strong gain of 1.2%, its best showing since April. The key manufacturing indicator had posted four consecutive declines, so the sharp gain was welcome news. Durable Goods Orders bounced back from a sharp decline in October with a gain of 3.5%, well above the estimate of 1.7%. New Homes Sales also impressed with a five-month high, climbing to 464 thousand. The estimate stood at 449 thousand.
Across the border, Canada’s sole release last week looked good, as GDP posted a modest gain of 0.3%. This was more than enough to beat the estimate of 0.1%. GDP has posted three straight readings of 0.3%, and each has beaten the estimate, as the Canadian economy continues to grow at a faster pace than expected. The release boosted the Canadian dollar, which has recovered from the sharp losses sustained after the Fed’s dramatic taper announcement.
USD/CAD for Monday, December 30, 2013
USD/CAD December 30 at 14:35 GMT
USD/CAD 1.0695 H: 1.0728 L: 1.0688
- USD/CAD has edged lower in Monday trading. The pair has dropped below the 1.07 line early in North American trading.
- On the downside, 1.0652 has reverted to a support line. This weak line could face pressure if the US dollar rebounds. This is followed by support at 1.0573.
- 1.0783 is providing resistance. This is followed by resistance at 1.0852.
- 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, 1.10 and 1.1094
OANDA’s Open Positions Ratio
USD/CAD ratio is pointing to gains in short positions in Monday trading. This is consistent with what we are seeing from the pair, as the Canadian dollar has posted modest gains. A majority of the open positions in the USD/CAD ratio are short, indicating trader bias towards the Canadian dollar gaining ground against the US currency.
The Canadian dollar remains under pressure as it tries to remain below the 1.07 line. With the US releasing key housing data later in the day, we could see some volatility from USD/CAD if the release is not in line with market expectations.
- 15:00 US Pending Home Sales. Exp. 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.