USD/CAD – Lower After Sizzling Canadian Manufacturing Sales

USD/CAD has lost ground, as the Canadian dollar has posted gains for the a second straight day. The pair is trading in the low-1.10 range in the North American session. The loonie received a boost after an excellent report from Canadian Manufacturing Sales, which jumped 2.5%. Later in the day, BoC Governor Stephen Poloz addresses an event in Drummondville, Quebec. In the US, inflation numbers remain soft, as PPI came in at 0.0% last month.

There was good news from Canada’s manufacturing sector, as Manufacturing Sales, a key release, jumped 2.5% in August. This easily beat the estimate of 1.1%. This was the indicator’s strongest gain since March 2013. The Canadian dollar has responded with modest gains as it continues to move towards the key 1.10 level.

US inflation indicators remain soft, as underscored by weak manufacturing inflation numbers in August. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. We’ll get a look at consumer inflation numbers on Wednesday, with the release of Core CPI and CPI.

US numbers wrapped up last week on a high note. Core Retail Sales improved to 0.3%, edging above the estimate of 0.2%. Retail Sales posted a nice gain of 0.6%, well above the estimate of 0.3%. There was excellent news from the UoM Consumer Sentiment, which bounced back from a weak reading in July and improved to 84.6 points, its best showing since November 2012. The forecast stood at 83.2 points. These indicators point to an increase in consumer confidence and spending, which underscore a deepening economic recovery. Meanwhile, job numbers continue to be source of concern. Unemployment Claims rose to 315 thousand, the largest number of claims in 10 weeks. The reading was much higher than the estimate of 306 thousand. This follows soft numbers from JOLTS Job Openings and a dismal Nonfarm Payrolls last week. The troubling job numbers are unlikely to affect the Fed’s plan to continue trimming QE later this week, but a soft labor market could postpone plans to raise interest rates by mid-2015.

USD/CAD for Tuesday, September 16, 2014

USD/CAD September 16 at 14:35 GMT

USD/CAD 1.1056 H: 1.1098 L: 1.1032

USD/CAD Technical

• USD/CAD moved upwards in the Asian session and came close to resistance at 1.1124. The pair then reversed course and continued to drop in European trade. The pair is unchanged in the North American session.
• 1.1124 held firm as the pair moved higher before retracting.
• 1.1004 is an immediate support line. 1.0961 is next.
• Current range: 1.1004 to 1.1124

Further levels in both directions:

• Below: 1.1004, 1.0961, 1.0852, 1.0775 and 1.0678
• Above: 1.1124, 1.1278, 1.1414 and 1.1669

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions on Tuesday, reversing the direction seen a day earlier. This is not consistent with the movement of the pair, as the Canadian dollar has posted modest gains. The ratio has a slight majority of long positions, indicating weak trader bias towards the US dollar reversing directions and moving to higher ground.

USD/CAD Fundamentals

• 12:30 Canadian Manufacturing Sales. Estimate 1.1%. Actual 2.5%.
• 12:30 US PPI. Estimate 0.1%. Actual 0.0%.
• 12:30 US Core PPI. Estimate 0.1%. Actual 0.1%.
• 20:00 US TIC Long-Term Purchases. Estimate 24.3B.

* 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.