USD/CAD – Steady Ahead of Key US, Canadian Releases

USD/CAD has edged higher in Tuesday trading, as the pair trades at the 1.03 line in the European session. In economic news, both Canada and the US will release major events later in the day. Canada releases Core Retail Sales and the markets are expecting a healthy gain of 0.6%. In the US, the markets are expecting CB Consumer Confidence to drop, with an estimate standing at 79.9 points. This would be the first time the indicator has dropped below the 80 level since May.

The markets have settled down after the US Federal Reserve stunned the markets in deciding not to taper QE at its policy meeting last week. Most analysts had expected the Fed to announce a scaling down of the present bond-buying program of $85 billion/mth by $10-15 billion. However, the Fed was of the opinion that US economic data, particularly employment numbers, did not justify scaling down QE at this time. After the FOMC Statement, Federal Reserve Bank of St. Louis President James Bullard shed some light on the dramatic move (or lack of) by the Federal Reserve. Bullard said the vote was close, but weaker US numbers led to a decision not to taper. He added that the Fed may go ahead with “small” reductions to QE at its next policy meeting in October.

Overshadowed by the FOMC Statement were some excellent US releases on Thursday. Unemployment Claims came in at 309 thousand, well below the estimate of 331 thousand. Existing Home Sales rose to 5.48 million, crushing the estimate of 5.27 million and posting its best level in over three years. The Philly Fed Manufacturing Index rocketed from 9.3 to 22.3 points, its best showing since May 2011. Perhaps if we’d seen this kinds of numbers a week or two ago, the Fed might have introduced QE tapering. These strong numbers helped USD/CAD wipe out the losses it sustained following the Fed announcement.

Canadian inflation figures continue to be subdued. Core CPI rose from 0.0% to 0.2% in August, edging out the estimate of 01%. CPI dropped from 0.1% to a flat 0.0% in August, just shy of the estimate of 0.1%. The weak inflation numbers are reflective of a slow Canadian economy, which continues to be outpaced by its southern neighbor.

 

USD/CAD for Tuesday, September 24, 2013

Forex Rate Graph 21/1/13
USD/CAD September 24 at 11:10 GMT

USD/CAD 1.0298 H: 1.0311 L: 1.0272

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0158 1.0224 1.0282 1.0337 1.0442 1.0502

 

  • USD/CAD has edged higher in Tuesday trading. The pair has crossed above the 1.03 line in the European session.
  • The pair continues to face resistance at 1.0337. This weak line could face strong pressure if the US dollar shows some strength. This is followed by a strong resistance line at 1.0442.
  • The pair is receiving weak support at 1.0282. This line saw action today, and remains fluid. This is followed by a stronger support line at 1.0224.
  • Current range: 1.0282 to 1.0337

 

Further levels in both directions:

  • Below: 1.0282, 1.0224, 1.0158 and 1.0068
  • Above 1.0337, 1.0442, 1.0502, 1.0573, 1.0652 and 1.0758

 

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in Tuesday trading. This is reflected in the current movement of the pair, as the pair trades quietly. The ratio is currently made up of a slight majority of long positions, indicative of a trader bias towards the US dollar posting gains at the expense of the loonie.

The Canadian dollar continues to trade very close to the 1.03 line. The pair has not shown a lot of movement on Tuesday, but this could change in the North American session, as both countries release key data later in the day.

 

USD/CAD Fundamentals

  • 12:30 Canadian Core Retail Sales. Estimate 0.6%.
  • 12:30 Canadian Retail Sales. Estimate 0.6%.
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 12.5%.
  • 13:00 US HPI. Estimate 0.9%.
  • 14:00 US CB Consumer Confidence. Estimate 79.9 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 17 points.
  • 17:00 US FOMC Member Esther George Speaks. George is hawkish in stance.

 

*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

Market Analyst at OANDA
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.