USD/CAD Breaks 1.09 as Loonie Slide Worsens

The shaky Canadian dollar continues to lose ground on Wednesday. USD/CAD, propelled by an outstanding US GDP report, has pushed over the 1.09 level. Elsewhere in the US, ADP Nonfarm Payrolls softened in June, and the Federal Reserve will release a policy statement later in the day. In Canada, the Raw Materials Price Index looked sharp last month, posting a 1.1% gain.

In the US, Advance GDP soared in Q2, posting a gain of 4.0%. This easily beat the estimate of 3.1%. The boost in economic activity was boosted by strong consumer confidence and business activity in Q2. Meanwhile, ADP Nonfarm Payrolls was unable to keep pace. The key employment indicator dropped to 218 thousand, compared to 284 thousand a month earlier. This was well off the estimate of 234 thousand. If the official Nonfarm Payrolls follows suit with a weak reading, the US dollar could give up its recent gains.

If CB Consumer Confidence is any indication, the US consumer is brimming with optimism about the economy. The key indicator jumped to 90.9 points, crushing the estimate of 85.5 points. This was the indicator’s highest level since September 2007. Consumer confidence is closely tracked by analysts since a confident consumer is likely to increase consumption, which is critical for economic growth.

Like its giant southern neighbor, Canada has suffered from very low inflation levels, indicative of an underperforming economy. On Wednesday, there was some positive news as the Raw Materials Price Index posted a strong gain of 1.1%, a four-month high. This easily beat the forecast of 0.6%. The markets will be hoping for more good news from GDP on Thursday. The indicator is expected to improve slightly in June, with the estimate standing at 0.3%.

 

USD/CAD for Wednesday, July 30, 2014

USD/CAD July 30 at 15:20 GMT

USD/CAD 1.0909 H: 1.0912 L: 1.0850

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0678 1.0775 1.0852 1.0961 1.1004 1.1124

 

  • USD/CAD was unchanged in the Asian session. The pair moved upwards late in the European session and the Canadian dollar remains under pressure in North American trading.
  • 1.0961 is an immediate resistance line.
  • 1.0852 has switched to support as the pair trades at higher levels. 1.0775 is next.
  • Current range: 1.0852 to 1.0961

Further levels in both directions:

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

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions in Wednesday trade. This is not consistent with the pair’s movement, as the US dollar continues to move upwards. The ratio has a substantial majority of long positions, indicative of strong trader bias towards the US dollar continuing to posts gains.

 

USD/CAD Fundamentals

  • 12:30 Canadian RMPI. Estimate 0.6%. Actual 1.1%.
  • 12:30 Canadian IPPI. Estimate 0.3%. Actual -0.1%.
  • 12:15 US ADP Nonfarm Employment Change. Estimate 234K. Actual 218K.
  • 12:30 US Advance GDP. Estimate 3.1%. Actual 4.0%.
  • 12:30 US Advance GDP Price Index. Estimate 1.8%. Actual 2.0%.
  • 14:30 US Crude Oil Inventories. Estimate -0.5M. Actual -3.7M.
  • 18:00 US FOMC Policy Statement.
  • 18:00 US Federal Funds Rate. <0.25%.

*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.

Get OANDA's exclusive weekly Market Pulse FX

HTML
  • HTML
  • Text
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.