USD/CAD – Canadian Dollar Posts Gains as US Core Durables Slips

USD/CAD has posted losses on Tuesday, as the pair is trades in the mid-1.09 range in the North American session. Looking at today’s events, US Core Durable Goods declined by 0.8%, but Durable Goods Orders set a monthly record with a huge jump of 22.6%. CB Consumer Confidence was excellent, climbing to 92.4 points. In Canada, the only event of the day, Corporate Profits, posted a gain of 2.7%.

US durables painted a mixed picture on Tuesday. Core Durable Goods Orders, a key indicator, came in at -0.8%, its worst showing in 2014. This was nowhere near the estimate of +0.5%. At the same time, Durable Goods Orders stunned the markets with a record gain of 22.6%. The reason? A huge increase in the purchase of passenger planes in July. The greenback didn’t get any help from the mixed durables, losing ground to the Canadian dollar.

Financial leaders and central bankers met at Jackson Hole for a conference late last week, and the markets were all ears as Fed chair Janet Yellen delivered the keynote address on Friday. Any hopes for some dramatic news were dashed however, as Yellen did not provide any clues as to the timing of a rate hike. She reiterated that the US job market still needed to improve, so employment numbers remain a crucial factor in any rate move by the Fed. There is a divergence in monetary stance between the ECB and the Fed, as the Fed is winding up QE, while the ECB may be forced to provide stimulus to prop up the sagging Eurozone economy.

Canada continues to suffer from persistently low inflation, so weak CPI numbers on Friday were not a surprise. Core CPI, a key indicator, posted its second straight decline, coming in at -0.1%. This was shy of the estimate of +0.1%. CPI also declined last month, with a reading of -0.2%, which edged lower than the estimate of -0.1%. It was a different story with retail sales, which were outstanding in July. Core Retail Sales, the primary gauge of consumer spending, surprised with a 1.5% jump, its best showing in more than four years. This easily beat the estimate of 0.4%. Similarly, Retail Sales gained 1.1%, crushing the estimate of 0.3%.

 

USD/CAD for Tuesday, August 26, 2014

USD/CAD August 26 at 14:30 GMT

USD/CAD 1.0962 H: 1.0997 L: 1.0949

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0775 1.0852 1.0961 1.1004 1.1124 1.1278

 

  • USD/CAD moved lower in the Asian and European sessions. The pair is stable in North American trade.
  • On the upside, 1.1004 is an immediate resistance line. 1.1124 is stronger.
  • 1.0961 is under strong pressure and could break during the day. The next support line is 1.0852.
  • Current range: 1.0961 to 1.1004

Further levels in both directions:

  • Below: 1.0961, 1.0852, 1.0775 and 1.0678
  • Above: 1.1004, 1.1124, 1.1278 and 1.1414

 

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in Tuesday trade. This is not consistent with the pair’s current movement, as the Canadian dollar has posted gains. The ratio is close to an even split between short and long positions, indicating a lack of trader bias as to the direction that the pair will take.

 

USD/CAD Fundamentals

  • 12:30 US Core Durable Goods Orders. Estimate +0.5%. Actual -0.8%.
  • 12:30 US Durable Goods Orders. Estimate 7.4%. Actual 22.6%.
  • 13:00 US HPI. Estimate 0.3%. Actual 0.4%
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 8.2%. Actual 8.1%.
  • 14:00 US CB Consumer Confidence. Estimate 89.1 points. Actual 92.4 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 8 points. Actual 12 points.

* Key releases are in highlighted 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.