USD/CAD is showing little activity, as the pair trades in the high-1.02 range. The US dollar continues to pressure the loonie, and briefly pushed above the 1.03 line on Tuesday. In the US, manufacturing data was mixed, as Core Durable Goods Orders was very sharp, but Durable Goods Orders failed to meet the estimate. The markets are waiting for US housing data later on Wednesday. The markets continue to be preoccupied with the crisis in Italy, after Italian parliamentary elections concluded with no clear winner. There are fears of a protracted deadlock in Italy, or even the possibility of new elections, neither option being particularly palatable to the markets. There are no Canadian releases on Wednesday.
The results of this week’s parliamentary election in Italy shocked the country, and rattled markets in the Eurozone and beyond. The 5-Star Movement, which was largely a protest movement that was dubbed a “non-party”, managed to win more votes than any other single party. The Center-left bloc, headed by Pier Luigi Bersani, will have a majority in the lower house of parliament, but there is a stalemate in the Senate. This leaves the country in a political deadlock, as a workable government requires a majority in both houses. Prime Minister Monti’s party fared poorly at the polls, reflecting widespread dissatisfaction with Monti’s tough austerity measures. While Italian politicians scramble to sort out the election puzzle, Eurozone officials are clearly worried, as they try to put on a brave face on what has become the bloc’s latest crisis. German Foreign Minister Guido Westerwelle urged Italy to form a government as quickly as possible. Westerwelle noted that the entire Eurozone was “in the same boat” with regard to the debt crisis. French Finance Minister Pierre Moscovici stated that the results did not threaten stability in the Eurozone, but at the same time, it was essential that Italy gets its act together and form a new government. However, Spain’s foreign minister, Jose Garcia-Margallo did not hide his pessimism, warning that the election results could have negative consequences for both Italy and the Eurozone.
In the US, the Federal Reserve is back in the spotlight. On Tuesday, Fed Chair Bernard Bernanke testified before the US Senate Banking Committee, and sought to reassure the markets that the Fed was intent on continuing the current round of QE. There had been some speculation after the release of minutes from the most recent policy meeting that the Fed was considering an end to QE, but Bernanke stated that Fed was likely to continue with QE and ultra-low interest rates. Bernanke will testify before the House of Representatives on Wednesday, but analysts are not expecting any dramatic new developments.
USD/CAD for Wednesday, Feb 27, 2013
USD/CAD Feb 27 at 14:40 GMT
1.0272 H: 1.0277 L: 1.0252
USD/CAD is quiet, but the US dollar continues to put pressure on the loonie. The pair is facing weak resistance at 1.0282, and we could see this line break. There is stronger resistance at 1.0361. On the downside, 1.0229 is providing support. This is followed by the support line of 1.0157.
- Current range: 1.0229 to 1.0282
Further levels in both directions:
- Below: 1.0229, 1.0157, 1.01, 1.0041, 1.00 and 0.9940
- Above: 1.0282, 1.0361, 1.0446, 1.0523 and 1.0642
OANDA’s Open Position Ratios
The USD/CAD ratio remains very quiet, showing almost no movement in Wednesday trading. This is to be expected, as the pair is showing little activity, as it trades in a narrow range in the high-102 range. Most open positions are short, indicating a bias to the Canadian dollar recovering against the US currency.
USD/CAD remains bottled in a narrow range, but the greenback has been enjoying a strong run against the loonie, and has flirted with the 1.03 line. With the markets in crisis mode due to the fluid situation in Italy, we could see investors decide to stick with the safe-haven US dollar, at the expense of currencies such as the loonie.
- 13:30 US Core Durable Goods Orders. Estimate 0.3%. Actual 1.9%.
- 13:30 US Durable Goods Orders. Estimate -4.8%. Actual -5.2%.
- 15:00 US Fed Chairman Bernard Bernanke Speaks. Bernanke will testify on the Semiannual Monetary Policy Report before the House Financial Services Committee.
- 15:00 US Pending Home Sales. Estimate 1.7%.
- 15:30 US Crude Oil Inventories. Estimate 2.4M.
*Key releases are highlighted in bold
*All release times are GMT
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