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USD/CAD – Stable as Canadian Retail Sales Data Slides

The Canadian dollar continues to have an uneventful week, as USD/CAD trades in the mid-1.07 range late in the North American session. On the release front, Canadian data was weak, as Canadian Core Retail Sales and Retail Sales both softened in June. In the US, today’s sole event is Crude Oil Inventories.

Canadian retail sales data was a major disappointment. Core Retail Sales slipped to 0.1% last month, compared to 0.7% in the previous release. This missed the estimate of 0.3%. Retail Sales came in at 0.7%, compared  to 1.1% in the May reading. This was enough to beat the estimate, which stood at 0.6%. These are the only Canadian releases this week, so the movement of USD/CAD for the remainder of the week will be heavily dependent on US data.

US numbers were a mix on Tuesday. Inflation numbers continue to struggle, as Core CPI posted a paltry gain of 0.1%, shy of the estimate of 0.2%. The key index has looked anemic in 2014, with its highest gain this year at just 0.3%. CPI was bit stronger, as it gained 0.3% last month, matching the forecast. Meanwhile, Existing Home Sales jumped to 5.04 million, surpassing the estimate of 4.94 million. This was the best showing we’ve seen since October, and follows a disappointing release from Housing Starts, which was published last week.

Geopolitical tensions are bad news for the markets, which crave stability. With violence continuing in Ukraine and Gaza, nervous investors continue to eye the safe-haven US dollar, so the yen could see some pressure. In Ukraine, the downing of a Malaysian Airlines jet, apparently by pro-Russian separatists, has seriously frayed relations between the West and Russia, which have already been strained since the latter annexed Crimea. Fighting continues between the separatists and Ukrainian forces in Eastern Ukraine. The Europeans are threatening stronger sanctions against Russia, and escalating tensions in eastern Ukraine could shake up the markets. In the Middle East, the fighting in Gaza between Hamas and Israel has intensified, as Israel presses on with a land offensive and casualties rise on both sides. Meanwhile, the international community is intensifying efforts to broker a cease-fire, but in the meantime the fighting continues.

 

USD/CAD for Wednesday, July 23, 2014

USD/CAD July 23 at 15:50 GMT

USD/CAD 1.0740 H: 1.0743 L: 1.0711

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0414 1.0572 1.0678 1.0775 1.0852 1.0961

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions on Wednesday. This is consistent with the pair’s movement, as the US dollar has posted small gains. The ratio has a substantial majority of long positions, indicative of strong trader bias towards the US dollar gaining ground.

 

USD/CAD Fundamentals

*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 [4]

Currency Analyst at Market Pulse [5]
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.