USD/CAD – Loonie Flirts with 1.10 Despite Strong Canadian Mfg. Data

The Canadian dollar has edged lower in Tuesday trading. Early in the North American session, the pair is trading in the high-1.09 range. The loonie didn’t take advantage of strong manufacturing data, as Canadian Manufacturing Sales rose 1.0% in December, easily beating the estimate. However, Wholesale Sales looked weak, dropping sharply to 0.0%. It’s another quiet day in the US, with no releases on Tuesday.

Canadian Manufacturing Sales posted a strong gain of 1.0% in December, identical to the gain a month earlier. This was well above the estimate of 0.3%. Wholesale Sales failed to follow pace, coming in at 0.0%, down sharply from a 1.4% gain in November. This weak reading fell short of the estimate of 0.3%. The Bank of Canada will be on center stage on Wednesday, as the Bank of Canada releases its Rate Statement and Monetary Policy Report.

Last week ended on a busy note in the US, which saw the release of three key events. Building Permits showed little change, coming in at 0.99 million, shy of the estimate of 1.01 million. JOLTS Job Openings rose to 4.00 million, increasing from 3.93 million a month earlier. This beat the estimate of 3.97 million, and was welcome news from the employment front after the recent dismal Non-Farm Payrolls release. UoM Consumer Sentiment dropped to 80.4 points, down from 83.5 in the previous release. This was well below the estimate of 83.4, but a reading over the 80 line is certainly respectable.

Weak inflation levels remain a major concern in the US, as persistently low inflation is an indication of an underperforming economy. This was underscored by Core CPI, which posted a weak gain of just 0.1% in December. Producer Price Index posted a gain of 0.4%, reversing directions after three consecutive declines. Last week, Chicago Fed President Charles Evans said that the low rate of U.S. inflation is “both puzzling and worrisome,” and enough reason to maintain low interest rates, even if the employment picture continues to brighten. Analysts will be listening closely as to whether incoming Fed chair Janet Yellen shares these sentiments. Yellen takes over the helm of the Federal Reserve on February 1st.

 

USD/CAD for Tuesday, January 21, 2014

Forex Rate Graph 21/1/13

USD/CAD January 21 at 15:40 GMT

USD/CAD 1.0977 H: 1.1019 L: 1.0947

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0783 1.0852 1.0906 1.1000 1.1094 1.1319

 

  • USD/CAD has moved higher in Tuesday trading. The pair punched across the 1.10 line early in the European session, touching a high of 1.1019. USD/CAD has since retracted back into 1.09 territory.
  • 1.0906 continues to provide support. This is followed by a support level at 1.0852.
  • 1.1000 is the next line of resistance. This line was breached earlier in the day and could face more pressure. This is followed by 1.1094, which has remained intact since September 2009.
  • Current range: 1.0906 to 1.1000

 

Further levels in both directions:

  • Below: 1.0906, 1.0852, 1.0783, 1.0652 and 1.0573
  • Above 1.1000, 1.1094, 1.1319 and 1.1496

 

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed positions in Tuesday trading, pointing to gains in long positions. This is reflected in the pair’s movement, as the Canadian dollar has lost ground. USD/CAD is made up of a majority of short positions, indicating a trader bias towards the Canadian dollar reversing its downward movement.

USD/CAD pushed across the 1.10 line earlier in the day but was unable to consolidate above these key level. Early in the North American session, the pair has steadied in the high-1.09 range.

 

USD/CAD Fundamentals

  • 13:30 Canadian Manufacturing Sales. Estimate 0.3%. Actual 1.0%.
  • 13:30 Canadian Wholesale Sales. Estimate 0.3%. Actual 0.0%.

 

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.