USD/CAD – Canadian Dollar Edges Higher As GDP Rebounds

USD/CAD has edged lower in Monday trading. The pair dipped below the 1.03 level in the North American session, as the loonie took advantage of a solid Canadian GDP release. In other economic events, Canadian inflation releases were well short of their estimates. In the US, today’s sole release, Chicago PMI looked strong, posting a four-month high. The spotlight remains on Congress, as the deadlock over the budget threatens to close down the US government on Tuesday.

Canadian GDP, released every month, looked sharp in August. The key indicator posted a healthy 0.6% gain, bouncing back from a disappointing decline of -0.5% in July. The strong gain matched the forecast, and has given the Canadian dollar a slight lift in Monday trading. Canada also released inflation data on Monday and the numbers indicate that inflation remains subdued. Raw Materials Price Index posted a gain of 0.9%, well off the estimate of 3.2%. The Industrial Product Price Index followed suit, posting a modest gain of 0.2%. The estimate stood at 0.9%.

All eyes are glued on Washington, as the US government will find itself without funds to operate if Congress fails to break the budget impasse on September 30, the last day of the current financial year. If that happens, non-essential government services would be forced to shut down. This last happened in 1996, and politicians on both sides of the divide will be trying to hammer out an agreement so that the government can keep operating. Both sides seem entrenched in their positions. Republicans want to defund Obamacare before they approve a budget, and the Democrats are determined to protect their health care bill. This crisis, which would likely affect the currency markets, could be a dress rehearsal for a much more serious crisis, which will occur in two weeks if Congress doesn’t raise the debt ceiling.

 

USD/CAD for Monday, September 30, 2013

Forex Rate Graph 21/1/13
USD/CAD September 30 at 14:10 GMT

USD/CAD 1.0288 H: 1.0313 L: 1.0277

 

USD/CAD Technical

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

 

  • USD/CAD has posted modest losses in Monday trading. The pair dropped below the 1.03 line in the North American session.
  • The pair continues to face resistance at 1.0337. This is followed by a strong resistance line at 1.0442.
  • The pair is testing support at 1.0282. This line could fall if the Canadian dollar continues to improve. 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 pointing to movement in the direction of short positions in Monday trading. This is reflected in the current movement of the pair, as the Canadian dollar has posted modest gains against its US counterpart. The ratio is made up of a majority of long positions, indicative of a trader bias towards the US dollar reversing direction and moving higher.

The Canadian dollar has pushed below the 1.03 line and is pressuring the US dollar. We could see continued movement from the pair during the day if the US budget crisis is not resolved.

 

USD/CAD Fundamentals

  • 12:30 Canadian GDP. Estimate 0.6%. Actual 0.6%.
  • 12:30 Canadian Raw Materials Price Index. Estimate 3.2%. Actual 0.9%.
  • 12:30 Canadian Industrial Product Price Index. Estimate 0.9%. Actual 0.2%.
  • 13:45 US Chicago PMI. Estimate 54.5 points. Actual 55.7 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.

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.
Kenny Fisher

Latest posts by Kenny Fisher (see all)