USD/CAD – Unchanged as US Retail Sales Falters

USD/CAD is steady in Monday trading. The pair is trading just above the 1.04 line early in the North American session. There was little reaction from the pair to Monday’s US releases. US Core Retail Sales and Retail Sales both fell short of their estimates. However, there was a strong manufacturing release as the Empire State Manufacturing Index posted it best performance since January. There are no Canadian releases on Monday. 

The US did not get off to a very good start to the week, as both Core Retail Sales and Retail Sales missed their estimates. Core Retail Sales fell from 0.3% to 0.0%, while Retail Sales slid from 0.6% to 0.4%. Both key releases fell short of their estimates. There was another strong showing from the Empire State Manufacturing Index, which jumped from 7.8 points to 9.5 points, its best level since January.  

Last week’s US releases ended on a mixed note. UoM Consumer Sentiment disappointed as it missed expectations. The key indicator improved in June to 83.9 points from 82.7, but this fell well short of the estimate of 85.3 points. However, the markets appeared to focus on the fact that the indicator posted a respectable gain and remains at high levels, so the US dollar was unscathed. PPI, an important inflation index, looked strong as it jumped from 0.5% to 0.8%. The estimate stood at 0.5%, and this was the best showing since October 2012. US Business Inventories dipped to 0.1% in June, down from 0.3%.

The US dollar lost ground to the loonie last week, following the release of the minutes from the Fed’s last policy meeting, as well as dovish remarks from Fed chair Bernard Bernanke. The minutes indicated that Federal Reserve policymakers remain deeply divided over when to scale down the current round of QE, whereby the Fed purchases $85 billion in assets each month. About half of the Fed policymakers favor scaling down QE before the end of 2013, while others feel that the employment market is still too fragile for the Federal Reserve to take any action. The dollar continued to lose ground as Federal Reserve chair Bernanke gave a speech in which he said that the Fed would maintain a loose monetary policy for the foreseeable future, due to low levels of inflation and a high US unemployment rate. The Canadian dollar has managed to hold onto these gains into this week. 

 

USD/CAD for Monday, July 15, 2013

Forex Rate Graph 21/1/13
USD/CAD July 15 at 15:20 GMT

USD/CAD 1.0405 H: 1.0434 L: 1.0380

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0229 1.0282 1.0337 1.0442 1.0502 1.0573

 

USD/CAD is showing very little movement, and as a result, the proximate support and resistance levels remain intact (S1 and R1 above). In the Asian session, the pair traded just below the 1.04 line, and crossed this level in the European session. USD /CAD continues to face resistance at 10442. This is a weak line, and could face pressure if the US dollar can push higher. This is followed by strong resistance at 1.0502. On the downside, there is support at 1.0337. This is followed by a support level is at 1.0282.

  • Current range: 1.0337 to 1.0442

 

Further levels in both directions:

  • Below: 1.0337, 1.0282, 1.0229 and 1.0157
  • Above: 1.0442, 1.0502, 1.0573, 1.0652, 1.0705 and 1.0780

 

OANDA’s Open Positions Ratio

USD/CAD ratio is not showing much movement in Monday trading. This is reflected in the lack of movement exhibited by the pair, which continues to trade quietly. Short positions now have a slight majority of the open positions, indicating slight trader bias towards the loonie continuing to move higher.

USD/CAD is off to a slow start, and showed little interest in Monday’s US releases. We could be in store for an uneventful day from the pair. This will likely change on Tuesday, with both Canada and the US posting key events.

 

USD/CAD Fundamentals

  • 12:30 US Core Retail Sales. Estimate 0.7%. Actual 0.4%.
  • 12:30 US Retail Sales. Estimate 0.5%. Actual 0.0%.
  • 12:30 Empire State Manufacturing Index. Estimate 5.2 points. Actual 9.5 points.
  • 14:00 US Business Inventories. Estimate 0.2%. Actual 0.1%.

 

*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.