The Canadian dollar has edged higher on Tuesday, as the currency continues to move higher this week against its US counterpart. USD/CAD is trading in the low-1.06 range in Tuesday’s North American session. In economic releases, today’s highlight out of the US is CB Consumer Confidence. There are no Canadian releases this week.
The first US release of the week did not impress, as US Pending Home Sales gained just 0.2% in November. This was well short of the forecast of 1.1%. However, the modest gain did break a string of five straight declines, so perhaps the key indicator has turned the corner on its recent downward spiral. Last week’s housing data looked much stronger, as New Home Sales beat the forecast.
US Unemployment Claims dropped sharply on Thursday. The indicator fell to 338 thousand, down from 379 thousand in the previous release. The estimate stood at 346 thousand. The sharp reading was a dramatic reversal from numbers over the past two weeks, which were much higher than the forecast. With the Federal Reserve poised to begin its long-awaited QE taper next month, employment releases have taken on added significance. If the labor market continues to improve, we are likely to see further QE reductions, which would give a boost to the US dollar against its major rivals.
There was some holiday cheer from US releases last week, as manufacturing and housing numbers pointed upwards. Core Durable Goods Orders posted a strong gain of 1.2%, its best showing since April. The key manufacturing indicator had posted four consecutive declines, so the sharp gain was welcome news. Durable Goods Orders bounced back from a sharp decline in October with a gain of 3.5%, well above the estimate of 1.7%. New Homes Sales also impressed with a five-month high, climbing to 464 thousand. The estimate stood at 449 thousand.
Across the border, Canada’s sole release last week looked good, as GDP posted a modest gain of 0.3%. This was more than enough to beat the estimate of 0.1%. GDP has posted three straight readings of 0.3%, and each has beaten the estimate, as the Canadian economy continues to grow at a faster pace than expected. The release boosted the Canadian dollar, which has recovered from the sharp losses sustained after the Fed’s dramatic taper announcement.
USD/CAD for Tuesday, December 31, 2013
USD/CAD December 31 at 14:20 GMT
USD/CAD 1.0626 H: 1.0657 L: 1.0625
- USD/CAD has edged lower in Monday trading. The pair has dropped below the 1.07 line early in North American trading.
- On the downside, 1.0652 has reverted to a support line. This weak line could face pressure if the US dollar rebounds. This is followed by support at 1.0573.
- 1.0783 is providing resistance. This is followed by resistance at 1.0852.
- Current range: 1.0652 to 1.0783
Further levels in both directions:
- Below: 1.0652, 1.0573, 1.0502, 1.0442 and 1.0337
- Above 1.0783, 1.0852, 1.10 and 1.1094
OANDA’s Open Positions Ratio
USD/CAD ratio is pointing to gains in short positions in Monday trading. This is consistent with what we are seeing from the pair, as the Canadian dollar has posted modest gains. A majority of the open positions in the USD/CAD ratio are short, indicating trader bias towards the Canadian dollar gaining ground against the US currency.
The Canadian dollar remains under pressure as it tries to remain below the 1.07 line. With the US releasing key housing data later in the day, we could see some volatility from USD/CAD, is the release is not in line with market expectations.
- 14:00 US S&P/CS Composite-20 HPI. Estimate. 13.4%. Actual 13.6%.
- 14:45 US Chicago PMI. Estimate. 61.3 points. Actual 59.1 points.
- 15:00 US CB Consumer Confidence. Estimate. 76.5 points. Actual 78.1 points.
*Key releases are highlighted in bold
*All release times are GMT
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