USD/CAD – Back Below 1.09 as BOC Holds Steady on Rates

The Canadian dollar bounced back on Wednesday and has recovered most of the losses incurred a day earlier. In the North American session, USD/CAD is trading in the high-1.08 range. As expected, the Bank of Canada maintained the benchmark interest rate at 1.0% and the BOC remains neutral in monetary stance. In the US, there are no major events on the calendar. Factory Orders jumped 10.5% last month, slightly below expectations.

As expected, the BOC held interest rates at 1.0% on Wednesday. The rates have remained steady for 4 years, the longest lack of movement since the 1950s. The central bank remains in a neutral stance, noting that there is slack in the economy. A rate move is unlikely before 2015, and what direction rates would move depends on the strength of the economy.

US numbers continue to impress the markets. On Tuesday, ISM Manufacturing PMI impressed the markets, climbing to 59.0 points, its best showing since April 2011. The index easily beat the estimate of 57.0 points. The strong showing follows an unexpectedly strong GDP, which hit 4.2%. With the US economy moving forward at a fast clip, the US dollar has taken full advantage and has made broad gains this week against its major rivals. US Employment data will be in the spotlight for the remainder of the week, with the release of ADP Nonfarm Payrolls on Thursday, followed by the official Nonfarm Payrolls and the unemployment rate on Friday.

 

USD/CAD for Wednesday, September 3, 2014

USD/CAD September 3 at 15:40 GMT

USD/CAD 1.0876 H: 1.0943 L: 1.0872

 

USD/CAD Technical

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

 

  • USD/CAD edged lower in the Asian and European sessions. The pair has recorded stronger losses in the North American session, with the pair easily pushing into 1.08 territory.
  • 1.0852 is an immediate support line. 1.0775 is stronger.
  • On the upside, 1.0961 has strengthened as the Canadian dollar continues to gain ground.
  • Current range: 1.0852 to 1.0961

Further levels in both directions:

  • Below: 1.0852, 1.0775, 1.0678 and 1.0588
  • Above: 1.0961, 1.1004, 1.1124 and 1.1278

 

OANDA’s Open Positions Ratio

USD/CAD ratio has a slight majority of long positions, indicating modest trader bias towards the US dollar reversing its downward slide.

 

USD/CAD Fundamentals

  • 14:00 Bank of Canada Overnight Rate. Estimate 1.00%. Actual 1.00%.
  • 14:00 US Factory Orders. Estimate 10.9%. Actual 10.9%.
  • All Day – US Day Total Vehicle Sales. Estimate 16.5M.
  • 18:00 US Beige Book.

* 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.