USD/CAD – Rangebound Trade Continues

The Canadian dollar finds itself above the 1.08 line, following losses late last week against its US counterpart. In the US, Flash Services PMI was almost unchanged in June. Pending Home Sales shocked with a decline of 1.1%, its worst showing in 2014. There are no Canadian releases on Monday.

The US ended last week on a high note, courtesy of strong data from the manufacturing sector. Core Durable Goods Orders jumped 0.8%, beating the estimate of 0.6%, and rebounding nicely from a decline of 0.1% in May. Durable Goods Orders followed suit, posting a gain of 0.7%, compared to a weak reading of -1.0% last month. This easily surpassed the estimate of 0.4%. 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, which has helped the dollar. As well, positive news on the employment front is bound to increase speculation about a rate increase by the Federal Reserve.

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%. Canada will release inflation data on Wednesday, with the markets expecting stronger readings for the June releases.

 

USD/CAD for Monday, July 28, 2014

USD/CAD July 28 at 13:50 GMT

USD/CAD 1.0812 H: 1.0818 L: 1.0801

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0572 1.0678 1.0775 1.0852 1.0961 1.1004

 

  • USD/CAD is flat, having showed almost no movement during the day.
  • 1.0852 is an immediate resistance line. This is followed by 1.0961, which has held firm since the first week in June.
  • 1.0775 has reverted to a support role as the pair trades above the 1.08 level. 1.0678 is stronger.
  • Current range: 1.0775 to 1.0852

Further levels in both directions:

  • Below: 1.0775, 1.0678, 1.0572 and 1.0414
  • Above: 1.0852, 1.0961, 1.1004 and 1.1124

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Monday. This is not consistent with the pair’s current lack of movement. The ratio has a substantial majority of long positions, indicative of strong trader bias towards the US dollar breaking out of rangebound trading and moving to higher ground.

 

USD/CAD Fundamentals

  • 13:45 US Flash Services PMI. Estimate 62.3 points. Actual 61.0 points.
  • 14:00 US Pending Home Sales. Estimate -0.2%. Actual -1.1%.

*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.