USD/CAD – Rangebound Trade Continues

The Canadian dollar has been listless this week, and the trend continued on Thursday, as the pair trades in the mid-1.07 range in the North American session. Looking at today’s releases, US Unemployment Claims sparkled, dropping to their lowest level in over eight years. However, New Home Sales dropped sharply in June, well shy of the forecast. There are no Canadian releases on Thursday.

Unemployment Claims tumbled last week, as the key indicator fell to 284 thousand, its lowest level since February 2008. This surprised the markets, which had expected a reading of 310 thousand. The strong release continues a string of solid employment data, and the dollar could get a boost from the good news. As well, good news on the employment front is bound to increase speculation about a rate increase by the Federal Reserve.

US housing data was dismal on Thursday, as New Home Sales slumped to a three-month low. The key indicator fell to 406 thousand, compared to 504 thousand in the previous release. The markets were way off in their forecast, with an estimate of 485 thousand. There was much better news earlier in the week, as 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.

Canadian retail sales figures in June were a major disappointment. Core Retail Sales posted a paltry gain of 0.1%, 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.

 

USD/CAD for Thursday, July 24, 2014

USD/CAD July 24 at 15:00 GMT

USD/CAD 1.0741 H: 1.0743 L: 1.0718

 

USD/CAD Technical

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

 

  • USD/CAD dropped to a low of 1.0717 in the European session but has recovered. The Canadian dollar is under pressure in the North American session.
  • On the upside, 1.0775 is an immediate resistance line. 1.0852 is stronger.
  • 1.0678 is providing support. 1.0572 is next.
  • 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 pointing to gains in long positions on Thursday, reversing the direction seen a day earlier. 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

  • 12:30 US Unemployment Claims. Estimate 310K. Actual 298K.
  • 13:45 US Flash Manufacturing PMI. Estimate 57.5 points.
  • 14:00 US New Home Sales. Estimate 485K. Actual 406K.
  • 14:30 US Natural Gas Storage. Estimate 95B. Actual 90B.

*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

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.