USD/CAD – Almost Unchanged in Cautious Trading

USD/CAD is showing little movement, despite some key releases out of both Canada and the US on Thursday. The pair continues to trade in the high-1.01 range. The markets are trading cautiously, waiting to see how events unfold in the Cyprus crisis. In economic news, US releases continue to look sluggish, as Unemployment Claims was well above the estimate. In Canada, GDP bounced back into positive territory, and was slightly higher than the forecast.

There has been a lot of talk of the US recovery deepening, but this week has been a disappointment, as economic releases point to continued weakness across a wide range of sectors. The markets had hoped for strong housing numbers this week, but two major housing releases were weak. New Home Sales fell sharply from 437 thousand to 411 thousand, well below expectations. Pending Home Sales also looked weak, declining 0.4%. The forecast stood at -0.3%. The news was no better from Unemployment Claims, which has enjoyed a run of readings that were below expectations. This time around, the key employment indicator hit a five-week high, at 357 thousand news claims. This was way above the estimate of 340 thousand. US Final GDP also missed its estimate, coming in at 0.4%. The estimate stood at 0.5%. The weak US numbers have raised concerns about the health of the US economy, and the markets will be hoping to wrap up the trading week with better news. In Canada, GDP, one of the most important economic releases, climbed from 0.0% last month to 0.2%. This modest rise was good enough to beat the estimate of 0.1%. The Canadian dollar was unchanged after these key releases, as USD/CAD continues to trade in a narrow range.

After a frantic week of negotiations over a bailout between Cyprus, the EU and the IMF, a bailout agreement was announced on Monday, but the markets remain jittery. The agreement has not brought calm to the small Eurozone member, which has been at the center of a financial crisis over the EUR10 billion bailout. The country’s banks reopened on Thursday, after being closed for business for almost two weeks. Fearing a bank run, the government has imposed strict controls, including limiting withdrawals to 300 euros a day, and a ban on cashing checks. The size of the haircut which will be imposed on accounts of over 100,000 euros is still unknown, and there are rumors that these depositors could lose up to 40% of their savings. The euro has taken a hit over the crisis, dropping over two cents against the dollar this week.

The Bank of Japan does not meet for a policy meeting until late next week, but the new BOJ Governor, Haruhiko Kuroda, continues to make headlines, as the markets seem to be weighing every word of his. Kuroda has made no secret of his plans to implement further monetary easing, although he has been short on specifics. On Tuesday , Kuroda revealed a few of his closely-held cards and stated that the BOJ will consider abolishing a rule which limits the amount of government bonds that the BOJ is permitted to purchase. Further, the central bank will discuss extending the maturity of such bonds from the current three years to five years.

 

USD/CAD for Thursday, March 28, 2013

Forex Rate Graph 21/1/13
USD/CAD March at 14:30 GMT

1.0164 H: 1.0195 L: 1.0150

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0041 1.01 1.0157 1.0229 1.0282 1.0361

 

USD/CAD is trading quietly, as the proximate support and resistance lines remain in place (S1 and R1 above). On the upside, there is resistance at 1.0229. This is followed by 1.0282. On the downside, there is pressure on the support line of 1.0157. This line was breached earlier today by the pair. The next support level is at the round number of 1.01.

  • Current range: 1.0157 to 1.0229

 

Further levels in both directions:

  • Below: 1.0157, 1.01, 1.0041 and 1.00
  • Above: 1.0229, 1.0282, 1.0361, 1.0446 and 1.0523

 

OANDA’s Open Position Ratios

USD/CAD ratio is pointing to movement towards long positions in Thursday trading.  This is not reflected in the current movement of the pair, which has been trading in a narrow range and has not shown any sustained momentum in either direction. A majority of the open positions are short, pointing to a bias towards the Canadian dollar improving against the US currency.

USD/CAD continues to trade quietly, paying little attention to Thursday’s key releases out of Canada and the US. With the markets closed in Canada on Friday, we can expect thin trading into the weekend.

USD/CAD Fundamentals

  • 12:30 Canadian GDP. Estimate 0.1%. Actual 0.2%
  • 12:30 Canadian RMPI. Estimate 1.9%. Actual 2.2%
  • 12:30 Canadian IPPI. Estimate 0.6%. Actual 1.4%
  • 12:30 US Unemployment Claims. Estimate 340K. Actual 357K
  • 12:30 US Final GDP. Estimate 0.5%. Actual 0.4%
  • 12:30 US Final GDP Price Index. Estimate 0.9%. Actual 1.0%
  • 13:45 US Chicago PMI. Estimate 56.5 points. Actual 52.4 points
  • 14:30 US Natural Gas Storage. Estimate -85B. Actual -95B

 

*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.

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.