USD/CAD -Unchanged After Solid Canadian Retail Sales

It’s been a very quiet week for USD/CAD, as the pair continues to tread softly in the mid-1.02 range. In economic releases, Canadian numbers looked sharp, as Core Retail Sales and Retail Sales beat their estimates.  Core Retail Sales, a key event, improved from 0.5% to 0.7%, beating the estimate of a 0.5% gain. Retail Sales dropped from 1.0% to 0.8%, but came in above the forecast of 0.3%. Bank of Canada Governor Mark Carney is testifying before the House of Commons Standing Committee on Finance in Ottawa. In the US, Flash Manufacturing PMI was a disappointment, hitting a six-month low. The markets are hoping for better news from US New Home Sales, after Existing Home Sales fell below the estimate on Monday.

What’s wrong with the US? The country’s economic releases continue to disappoint the markets, as last week’s key releases fell below expectations. Last week, there was more bad news, as employment and manufacturing numbers missed the mark. Unemployment Claims came in at 352 thousand, higher than the estimate of 349 thousand. The Philly Fed Manufacturing Index dropped from 2.0 points to 1.3 points, nowhere near the estimate of 2.7 points. This week started no better, as Existing Home Sales came in at 492 million, well off the estimate of 5.02 million. The markets are hoping that Tuesday’s numbers look better.

The yen lost ground on Monday, as the G20 meeting, which wrapped up on Friday, did not censure Japan for its easing policies which have sent the yen plunging. Japanese officials were pleased with the outcome, as they feel there is now less pressure on the government to continue its easing policies, which will likely push the yen down even further. The Japanese currency has lost 20% of its value in the past six months, and most analysts believe it is only a matter of time before it falls below the 100 level. A weak yen has made Japanese exports cheaper, which has hurt the export sectors of countries such as Canada.

USD/CAD for Tuesday, April 23, 2013

1.0256 H: 1.0284 L: 1.0254

USD/CAD continues to trade in a narrow range. The pair is facing resistance at 1.0282. This weak line could face pressure if the US dollar moves higher. There is stronger resistance at 1.0361. On the downside, there is support at 1.0229. The next support level is at 1.0157.

• Current range: 1.0229 to 1.0282

Further levels in both directions:

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

OANDA’s Open Position Ratios

USD/CAD ratio is showing movement towards the short positions. Although the pair is not showing much movement at present, the activity in the ratio could be an early indication that the Canadian dollar will break out and push higher. There is a strong bias towards the loonie making gains against the US dollar, as short positions enjoy a substantial majority in the ratio.

USD/CAD continues to trade very quietly, and showed little reaction to solid Canadian numbers. We could see the pair continue to drift and stick close to the 1.0250 level. 

USD/CAD Fundamentals

• 12:30 Canadian Core Retail Sales. Estimate 0.5%. Actual 0.7%
• 12:30 Canadian Retail Sales. Estimate 0.3%. Actual 0.8%
• 12:45 Bank of Canada Governor Mark Carney Speaks in Ottawa
• 13:00 US Flash Manufacturing PMI. Estimate. 53.8 points. Actual 52.0 points
• 13:00 US HPI. Estimate 0.7%. Actual 0.7%
• 14:00 US New Home Sales. Estimate 416K.
• 14:00 US Richmond Manufacturing Index. Estimate 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.