USD/CAD – Loonie Edges Higher After Mixed US Numbers

USD/CAD has edged lower on Wednesday, as the pair trades in the mid-1.04 range. The pair has shrugged off a host of US key releases on Wednesday, which were mixed. Later today, we’ll get a look at the minutes of the Federal Reserve’s most recent policy meeting. Amid all the US releases, there was one Canadian release on Wednesday. The indicator dropped to 0.2%, from 0.5% last month. The markets had expected better, with an estimate of 0.4%.

After a quiet start to the week, there were four key US releases on Wednesday. Core Retail Sales posted a weak gain of 0.2%, compared to 0.4% in the previous release. However, this was good enough to beat the estimate of 0.1%. Retail Sales looked stronger, posting a gain of 0.4%, bouncing back from last month’s reading of -0.1%. Core CPI came in at 0.1%, matching the forecast. This is the third straight month that Core CPI has posted this weak figure, so clearly low inflation remains a concern. To underscore this point, CPI dropped 0.1%, its first decline since May. Elsewhere, Existing Homes slipped to a four-month low, at 5.12 million new units. The estimate stood at 5.17 million.

Canadian Foreign Securities Purchases looked sharp in October, coming in at C$8.36 billion, bouncing back nicely from the previous release of C$2.08 billion. The easily beat the estimate of C$6.71 billion. The indicator is closely linked to currency demand, since foreigners need to purchase Canadian dollars in order to buy domestic securities. So, a stronger indicator is good news for the Canadian dollar.

Later on Wednesday, the Federal Reserve will release the minutes of its most recent policy meeting. This event is a market-mover and analysts will be paying close attention to the minutes, especially regarding QE. The markets are expecting the Fed to hold off from tapering in December, as US numbers are still not as strong as the Fed would like. Market sentiment is leaning towards the Fed sticking to its present monetary policy, and any surprises in the minutes would likely shake up the currency markets.

Speaking on Tuesday, Fed Reserve Chair Bernard Bernanke said that the Fed remained committed to the current accommodative monetary policy, which stands at $85 billion in asset purchases every month. Bernanke state that the Fed would not taper QE before it was sure that the employment picture continued to improve. Similar sentiments were expressed by Janet Yellen last week when she testified before a senate committee. Yellen is expected to take over as the new head of the Federal Reserve in January.

USD/CAD for Wednesday, November 20, 2013

USD/CAD November 20 at 16:05 GMT

USD/CAD 1.0443 H: 1.0474 L: 1.0438

USD/CAD Technical

• USD/CAD continues to trade in the mid-1.04 range. The pair touched a high of 1.0474 early in the European session but has edged lower since that time.
• On the upside, the pair is facing resistance at 1.0502. This is followed by resistance at 1.0573.
• The pair is testing support at 1.0442. This line has been busy since the start of the week. This is followed by stronger support at 1.0337.
• Current range: 1.0442 to 1.0502

Further levels in both directions:

• Below: 1.0442, 1.0337, 1.0282, 1.0224 and 1.0158
• Above 1.0502, 1.0573, 1.0652 and 1.0837 and 1.0945

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed directions in Wednesday trading and is pointing towards gains in short positions. This is reflected in the current movement of the pair, as the Canadian dollar has posted slight gains. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar continuing to move to higher ground.

The Canadian dollar is steady in Wednesday trading. USD/CAD did not react to today’s US and Canadian data, but that could change after the release of the minutes from the Fed’s last policy meeting.

USD/CAD Fundamentals

• 00:00 US Federal Reserve Chairman Bernard Bernanke Speaks.
• 13:30 Canadian Wholesale Sales. Estimate 0.4%. Actual 0.2%.
• 13:30 US Core CPI. Estimate 0.1%. Actual 0.1%.
• 13:30 US Core Retail Sales. Estimate 0.1%. Actual 0.2%.
• 13:30 US Retail Sales. Estimate 0.1%. Actual 0.4%.
• 13:30 US CPI. Estimate 0.0%. Actual -0.1%.
• 15:00 US Existing Home Sales. Estimate 5.17M. Actual 5.12M.
• 15:00 US Business Inventories. Estimate 0.3%. Actual 0.6%.
• 15:00 FOMC Member William Dudley Speaks.
• 15:30 US Crude Oil Inventories. Estimate -0.2M. Actual 0.4M.
• 17:10 FOMC Member James Bullard Speaks.
• 19:00 US FOMC Meeting Minutes.

*Key releases are highlighted in bold

*All release times are GMT

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