USD/CAD – Flat as Greenback Rally Stalls

After strong gains this week, USD/CAD has taken a breather on Wednesday, as the pair trades in the mid-1.10 range in the European session.  The Canadian dollar has sagged, losing over 100 points since Monday. On the release front, today’s highlight is US New Home Sales. The markets are expecting the indicator to improve in the upcoming release. There are no Canadian releases on Wednesday.

It was a poor start for Canadian numbers this week as retail numbers were dismal in August. Core Retail Sales slipped by 0.6%, the indicator’s first decline since January. The estimate stood at -0.1%. Retail Sales also softened, posting a decline of -0.1%. The markets had anticipated a gain of 0.4%. The weak figures point to decreasing spending by Canadian consumers, which does not bode well for the Canadian economy, as consumer spending is a critical engine for economic growth.

US Existing Home Sales didn’t impress in August, slipping to 5.05 million, compared to 5.15 million in the previous release. This was way off the estimate of 5.21 million. The indicator had exceeded the estimate in the past three releases, so the weak numbers disappointed the markets. The markets are hoping for better news from New Home Sales, which will be released later on Wednesday. The indicator has been struggling lately, with the past two readings missing expectations. The markets are expecting a stronger reading for August, with an estimate of 432 thousand.

The US economy continues to grapple with weak inflation levels, as underscored by August releases. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first decline since October. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. Core PPI also softened in August. Low inflation levels could delay the Federal Reserve’s plan to raise interest rates, which is widely expected to take place in the first half of 2015.

 

USD/CAD for Wednesday, September 24, 2014

USD/CAD September 24 at 11:55 GMT

USD/CAD 1.1073 H: 1.1087 L: 11065

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0852 1.0961 1.1004 1.1124 1.1278 1.1414

 

  • USD/CAD has shown almost no change in the Asian and European sessions, as the pair trades in the mid-1.10 range.
  • 1.1124 is the next strong resistance line.
  • 1.1004 is providing support. It has strengthened this week as the pair trades at higher levels.
  • 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 1.1493

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Wednesday, continuing the direction which has marked the ratio all week. This is not consistent with the movement of the pair, as the Canadian dollar continues is almost unchanged. The ratio has a majority of long positions, indicating trader bias towards the US dollar resuming its rally at the expense of the Canadian dollar.

 

USD/CAD Fundamentals

  • 14:00 US New Home Sales. Estimate 432K.
  • 14:30 US Crude Oil Inventories. Estimate 0.7M.
  • 16:05 US FOMC Member Loretta Mester Speaks.

* 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.