USD/CAD – Slight Gains at Start of Week

The US dollar has posted slight gains on Monday, as USD/CAD trades in the mid-1.12 range. On the release front, it’s a very quiet start to the week, with just one release out of the US. The Flash Services PMI continues to lose ground, dipping to 56.3 points in November. This fell short of the estimate of 57.3 points and marked the indicator’s lowest reading since May. There are no Canadian releases on Monday.

On Friday, Canadian inflation data beat the forecast. Core CPI improved to 0.3%, edging above the estimate of 0.2%. CPI came in at 0.0%, ahead of the estimate of -0.1%. The Canadian dollar responded with strong gains. Earlier in the week, Canadian Wholesale Sales, a key event, climbed 1.8% in November. This crushed the estimate of 0.7% and marked a 4-month high.

US consumer inflation remains weak, but met expectations in November. CPI posted a flat 0.0%, edging above the estimate of -0.1%. Core CPI posted a gain of 0.2%, matching the forecast. Unemployment Claims came in at 291 thousand higher than the estimate of 286 thousand. There was good news as well, as the Philly Fed Manufacturing Index soared to 40.8 points, its highest since March 2011. The estimate stood at 18.9 points. As well, Existing Home Sales improved to 5.26 million, a one year high. The markets had expected a reading of 5.16 million.

The Federal Reserve released its minutes on Wednesday and there were no clues about the timing of a rate hike. The markets are expecting rates to rise in the second half of 2015, but this will of course depend on economic conditions. With inflation below the Federal Reserve target of 2%, there is less pressure on the Fed to raise rates. The minutes also noted that weak economic outlooks in Europe and Japan are unlikely to have a negative impact on the US economy.

USD/CAD for Monday, November 24, 2014

USD/CAD November 24 at 16:00 GMT

USD/CAD 1.1273 H: 1.1282 L: 1.1225

USD/CAD Technical

• USD/CAD was flat in Asian trade. The pair has lost ground in the European and North American sessions.
• 1.1124 is a strong support level.
• On the upside, 1.1278 is fluid and could see further action during the day.
• Current range: 1.1124 to 1.1278

Further levels in both directions:

• Below: 1.1124, 1.1004, 1.0961 and 1.0886
• Above: 1.1278, 1.1414, 1.1493, 1.1669 and 1.1723

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions on Monday. This is consistent with the movement of the pair, as the Canadian dollar has posted losses. The ratio remains close to an event split between long and short positions, indicative of a lack of trader bias as to what direction USD/CAD will take.

USD/CAD Fundamentals

•  14:20 US Flash Services PMI. Estimate 57.3 points.

* Key releases are highlighted in 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.