The Canadian dollar has posted small gains on Monday, as USD/CAD trades in the mid-1.07 range late early in the North American session. There are no Canadian or US releases to start off the week, so traders can expect light trading in the North American session. On Friday, Canadian data was mixed. Wholesale Sales jumped 2.2%. However, Core CPI declined by 0.1%, its worst showing in 2014. In the US, UoM Consumer Sentiment remained steady at 81.3 points, but this was well short of the estimate of 83.5 points.
Recent US data has been mixed, but employment numbers continue to shine. On Thursday, Unemployment Claims dropped slightly to 302 thousand, beating the estimate of 310 thousand. This figure marks a seven-week low, as the economy continues to churn out impressive employment data. With Janet Yellen telling Congress that a rate hike could be pushed forward if inflation and employment data exceeds expectations, improving employment data will put more pressure on the Fed to raise rates.
Federal Reserve Chair Janet Yellen concluded two days of testimony on Capitol Hill last week. Yellen declined to answer questions about when the Fed would begin to raise rates, but she did acknowledge that most economists expect the Fed to make a move in the third quarter of 2015. On Tuesday, the dollar moved higher when Yellen said that the economy still required monetary stimulus, but rates could increase sooner than expected if inflation and job numbers improved more quickly than anticipated. The Federal Reserve’s asset purchase program (QE) has flooded the economy with over $2 trillion, keeping interest rates at ultra-low levels, but the Fed has been trimming the program since last December, when it stood at $85 billion/month. Currently, the Fed is pumping $45 billion/month into the economy, and the next taper is expected in August, with plans to terminate QE in October.
USD/CAD for Monday, July 21, 2014
USD/CAD July 21 at 14:45 GMT
USD/CAD 1.0727 H: 1.0763 L: 1.0709
- USD/CAD posted slight gains late in the Asian session. The pair is almost unchanged since then.
- On the upside, 1.0775 is the next resistance line. 1.0852 is stronger.
- 1.0678 is an immediate support level. 1.0572 is stronger.
- Current range: 1.0678 to 1.0775
Further levels in both directions:
- Below: 1.0678, 1.0572, 1.0414 and 1.0271
- Above: 1.0775, 1.0852, 1.0961 and 1.1004
OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged on Monday. This is consistent with the lack of movement of the pair, at the start of the week. The ratio has a substantial majority of long positions, indicative of strong trader bias towards the US dollar breaking out and gaining ground.
- There are no US or Canadian releases on Monday.