USD/CAD – Canadian Dollar Slide Continues Ahead of US Numbers

The Canadian dollar continues to lose ground on Wednesday, as USD/CAD trades in the mid-1.13 range. The pair has climbed about 170 points since Tuesday, and is trading at its highest level since July 2009. In the US, we’ll get a look at US releases after a quiet start to the week. There are three key events on the calendar – Retail Sales, Core Retail Sales and PPI. There are no Canadian releases on Tuesday.

On Friday, Canadian job figures were unexpectedly strong. Employment Change posted an outstanding gain of 74.1 thousand, crushing the estimate of 18.7 thousand. This was the strongest gain we’ve seen since May 2013. The unemployment rate dipped to 6.8%, its lowest level in almost six years. Despite the strong numbers, the Canadian dollar has been unable to stem the US dollar rally.

The US dollar has enjoyed a superb run against the Canadian dollar, gaining about 400 points in the past month. USD/CAD continues to roll despite last week’s FOMC minutes, which were unexpectedly dovish. In the minutes, the Fed poured some cold water on rising expectations of a rate hike, as a number of policymakers said that the Federal Reserve should take a more data-dependent approach regarding a rate hike. The Fed also voiced concern about the rising strength of the US dollar which could weigh on the recovery. On the weekend, FOMC member Stanley Fischer said that the Fed could slow tightening if global growth is weaker than expected. Strong US numbers have raised expectations about a rate hike, but the Fed appears to be taking a cautious approach towards the timing of a rate hike. Still, with QE set to wind up by the end of the month, rising speculation about higher rates bodes well for the US dollar.

USD/CAD for Wednesday, October 15, 2014

USD/CAD October 15 at 11:45 GMT

USD/CAD 1.1381 H: 1.1381 L: 1.1313

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.1004 1.1124 1.1278 1.1414 1.1493 1.1669

 

  • USD/CAD moved higher in the Asian session and this trend has continued in the European session.
  • On the downside, 1.1278 has strengthened as the pair continues to move higher.
  • 1.1414 is a weak resistance line. This line has remained intact since July 2009. The next line of resistance is at 1.1493.
  • Current range: 1.1278 to 1.1414

Further levels in both directions:

  • Below: 1.1278, 1.1124, 1.1004, 1.0961 and 1.0852
  • Above: 1.1414, 1.1493, 1.1669 and 1.1897

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Wednesday. This is not consistent with the pair’s movement, as the US dollar continues to climb. The ratio has a majority of short positions, indicating trader bias towards the Canadian dollar reversing directions and moving higher.

 

USD/CAD Fundamentals

  • 12:30 US Core Retail Sales. Estimate 0.2%.
  • 12:30 US PPI. Estimate 0.1%.
  • 12:30 US Retail Sales. Estimate -0.1%.
  • 12:30 US Core PPI. Estimate 0.1%.
  • 12:30 US Empire State Manufacturing Index. Estimate 20.3 points.
  • 14:00 US Business Inventories. Estimate 0.4%.
  • 18:00 US Beige Book.
  • 18:00 US Federal Budget Balance. Estimate 82.3B.

* 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.

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.