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USD/CAD – Greenback Continues Rally After Solid US Releases

The US dollar continues to climb against the retreating Canadian currency on Tuesday. In the North American session, USD/CAD was trading in the mid-1.05 range, its lowest levels since October 2011. The US dollar got a boost as all three major releases out of the US beat their estimates. There are no Canadian releases on Tuesday.

US releases charged out of the gates on Tuesday with impressive numbers. Core Durable Goods rose 0.7%, easily surpassing the estimate of 0.0%. CB Consumer Confidence shot up to a multi-year high, at 81.4 points. The estimate stood at 75.2 points. New Home Sales came in at 476 thousand, well above the estimate of 462 thousand. Manufacturing data, often a sore spot, also looked sharp as the Richmond Manufacturing Index shot up to 8 points, way above the estimate of 0 points. These strong numbers have given the US dollar a boost against the Canadian currency.

Canadian numbers continue to point to an economy in trouble. On Friday, inflation and retail sales numbers were a big disappointment. Core CPI posted a gain of 0.2%, missing the estimate of 0.3%. CPI also gained 0.2%, shy of the 0.4% estimate. Core Retail Sales slumped to a five-month low, declining by 0.3%. The estimate stood at 0.0%. Retail Sales rose 0.1%, missing the forecast of 0.2%. The weak figures have sent the loonie tumbling, as the currency struggles in the mid-1.05 range.

Greece has not been in the news recently, as the bailout program has been progressing according to schedule. However, the dark clouds of political instability have returned as the smallest party in the governing coalition, the Democratic Left party, quit the government on Friday. The reason was the government’s decision to close the state broadcaster as part of its plan to eliminate 15,000 public sector jobs by 2014, as mandated by the bailout agreement. The loss of the Democratic Left leaves the coalition with a razor-thin majority of just three seats. The timing of this crisis is particularly unfortunate, as Greece is due to receive another installment of bailout funds in July. The troika (European Commission, ECB and IMF) are playing down the crisis, saying that the bailout will proceed on schedule. If this proves not to be the case, we could some turbulence in the currency markets.

 

USD/CAD for Tuesday, June 25, 2013

Forex Rate Graph 21/1/13
USD/CAD June 25 at 14:20 GMT

USD/CAD 1.0536 H: 1.0547 L: 1.0458

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0337 1.0442 1.0502 1.0652 1.0705 1.0780

 

USD/CAD is moving higher, as the pair trades in the mid-1.05 range. USD/CAD is receiving support at 1.0502. This line could fall if the Canadian dollar shows any signs of recovery. There is stronger support at 1.0442. On the upside, the pair faces resistance at 1.0652. This line has remained in place since October 2011. The next line of resistance is at 1.0705.

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed directions, as there is some movement in favor of long positions. This is consistent with what we are seeing from the pair, as the US dollar has posted modest gains against the loonie.

The US dollar continues to climb higher, and got a boost on Tuesday as US data was very sharp. The US will release GDP numbers on Wednesday, and we could see the pair move higher if the numbers meet or beat market expectations. 

USD/CAD Fundamentals

 

*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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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