USD/CAD – Rangebound As Canadian Retail Sales Slides

The Canadian dollar is flat on Thursday, as USD/CAD trades just above the 1.09 line early in the North American session. It’s been a disappointing day on both sides of the border. In the US, Unemployment Claims were well off expectations, climbing to a three-week high. Meanwhile Canadian Retail Sales and Core Retail Sales slipped in April and missed their estimates.

US Unemployment Claims has looked sharp over the past two releases, but the short streak ended on Thursday. The key employment indicator climbed to 326 thousand, up from 297 thousand a week earlier. This was well above the estimate of 312 thousand. In Canada, Core Retail Sales, the primary gauge of consumer spending, slid to 0.1%, its smallest gain since January. The markets had expected a healthy gain of 0.5%. Retail Sales followed suit, dipping to -0.1%, which fell short of the estimate of 0.5%. We’ll get a look at Canadian CPI on Friday. If the key inflation indicator misses the modest estimate of 0.2%, the loonie could lose ground.

The Federal Reserve minutes were released on Wednesday, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates, but the minutes didn’t provide a timetable as to when rates might go up, and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.

USD/CAD for Thursday, May 22, 2014

USD/CAD May 22 at 14:00 GMT

USD/CAD 1.0908 H: 1.0930 L: 1.0900

USD/CAD Technical

• USD/CAD has edged lower on Thursday.
• The pair is testing support at 1.0906. Will the pair break into 1.08 territory?
• The key line of 1.1000 is providing strong resistance.
• Current range: 1.0906 to 1.1000

Further levels in both directions:

• Below: 1.0906, 1.0852, 1.0775, 1.0706, 1.0678
• Above: 1.10, 1.1094, 1.1177 and 1.1319

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in Thursday trading. This is not consistent with what we are seeing from the pair, as the Canadian dollar has edged higher. The ratio has a majority of long positions, indicative of trader bias in favor of the US dollar posting gains.

USD/CAD continues to trade close to the 1.09 line. The Canadian dollar has edged lower in the North American session.

USD/CAD Fundamentals

• 12:30 Canadian Core Retail Sales. Estimate 0.5%. Actual 0.1%.
• 12:30 Canadian Retail Sales. Estimate 0.2%. Actual -0.1%.
• 12:30 US Unemployment Claims. Estimate 312K. Actual 327K.
• 13:45 US Flash Manufacturing PMI. Estimate 55.6 points. Actual 56.2 points.
• 14:00 US Existing Home Sales. Estimate 4.71M.
• 14:00 US CB Leading Index. Estimate 0.4%.
• 14:30 US Natural Gas Storage. Estimate 104B.

*Key releases are highlighted in bold

*All release times are GMT

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