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USD/CAD – Loonie Edges Lower as US Posts Solid Numbers

USD/CAD has reversed direction on Thursday, as the Canadian dollar is moving higher. Early in the North American session, the pair is trading in the mid-1.04 range. In the US, Unemployment Claims beat the estimate and Pending Home Sales sparkled, with its best showing since 2006. There are no Canadian releases on Thursday, but the markets will be keeping a close eye as GDP, the Canadian highlight this week, is released on Friday.

 It’s  been a very good week for US releases. On Tuesday, Core Durable Goods, CB Consumer Confidence and New Home Sales, all key releases, beat their estimates. Manufacturing data, often a sore spot, also looked good as the Richmond Manufacturing Index had its best performance since last November. Wednesday’s GDP figures missed the estimate, but the markets didn’t react negatively, as the US dollar held firm against the major currencies.

On Thursday, Unemployment claims fell to 346 thousand, just below the estimate of 347 thousand. Pending Home Sales skyrocketed, posting a gain of 6.7%, its highest since 2006. This crushed the estimate of a 1.1% gain. These solid numbers are particularly encouraging as they come from a wide range of economic sectors. If US indicators continue to point upward, the Federal Reserve could act and start to reduce QE. Such a move would likely have a dramatic positive effect on the US dollar.

QE has been in the headlines lately, but the Fed seems to be sending out conflicting signals. The US dollar surged last week after Federal Reserve Chair Bernard Bernanke said that the Fed was planning to scale down QE. However, US (and global) stock markets fell sharply on the news, and the Fed finds itself trying to contain the damage and calm the nervous markets. Dallas Fed President Richard Fisher declared that “tapering” should not be confused with “tightening” and said that the Fed was not exiting from its accommodative policy action just yet. Minneapolis Fed President Naraya Kocherlakota reiterated that the Fed was continuing with an expansionary monetary policy event if QE was terminated, and said that it was a misperception to assume that the Federal Reserve had turned more hawkish. One can be excused for dismissing these statements as little more than linguistic acrobatics, and it is questionable if the markets will be reassured by these statements from the Fed, which are clearly aimed at damage control and reassuring nervous investors.


USD/CAD for Thursday, June 27, 2013

Forex Rate Graph 21/1/13
USD/CAD June 27 at 14:30 GMT

USD/CAD 1.0474 H: 1.0478 L: 1.0469


USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0282 1.0337 1.0442 1.0502 1.0652 1.0705


USD/CAD has edged higher in Thursday trading, leaving the proximate support and resistance levels intact (S1 and R1 above). USD/CAD continues to face resistance at 1.0502. This line could be tested if the US dollar continues to move higher. There is stronger resistance at 1.0652. On the downside, the pair is receiving support at 1.0442. This line is not strong, but has held firm all week as the US dollar has moved higher. The next support level is at 1.0337.


Further levels in both directions:


OANDA’s Open Positions Ratio

USD/CAD ratio has again gone quiet, with little movement on Thursday. This is reflected in the movement of the pair, as USD/CAD has been unable to break out, although the US  dollar has edged higher. Short positions continue to enjoy a strong majority of open positions, indicating a strong trader bias towards the pair continuing to move in a downward direction.

USD/CAD has edged higher, but so far we have not seen a strong reaction to solid US releases on Thursday. We could see the pair continue to trade in the high 1.04 range during the day. Traders can expect more volatility on Friday, as Canada releases GDP, while the US posts consumer confidence numbers.


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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