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USD/CAD – Steady As US Factory Orders Dips

The Canadian dollar is steady in Tuesday trade. Early in the North American session, USD/CAD is trading in the high-1.10 range. In economic news, US manufacturing numbers continued to disappoint, as Factory Orders slid to a five-month low. There are no Canadian releases on Tuesday.

US Factory Orders did not impress in January. The important manufacturing release posted a decline of 1.5%, compared to a gain of 1.8% a month earlier. The indicator did beat the estimate of -1.9%, but US manufacturing numbers continue to raise concerns. On Monday, ISM Manufacturing PMI dropped sharply, posting a ten-month low.

The Canadian dollar is happy to say goodbye to the month of January, as the currency tumbled almost five cents against the US dollar. The month ended with a disappointing GDP release, with a gain of just 0.2%. February has started off well, as the loonie moved higher on Monday, thanks to some solid inflation numbers. The Raw Materials Price Index bounced back from a sharp decline in December, posting a respectable gain of 1.7% in January. This was slightly short of the estimate of 1.9%. The Industrial Product Price Index followed suit with a 0.7% gain, marking a ten-month high. The strong readings are welcome news, as inflation has been at persistently low levels, indicating an underperforming economy.

In a highly anticipated decision, the US Federal Reserve pressed the taper trigger for a second month in a row last week . This reduces its stimulus program (QE) by another $10 billion, lowering the bond-buying scheme to $65 billion each month. Fed chair Bernard Bernanke has indicated that the Fed plans to wind up QE by the end of the year, so we can expect further tapers, barring any surprise downturns in the US economy. Wednesday’s policy statement was Bernanke’s swan song, as Janet Yellen took over the reins as Fed chair on February 1.

 

USD/CAD for Tuesday, February 4, 2014

Forex Rate Graph 21/1/13

USD/CAD February 4 at 15:45 GMT

USD/CAD 1.1087 H: 1.1123 L: 1.1062

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0852 1.0906 1.1000 1.1094 1.1177 1.1319

 

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions in Tuesday trading continuing the trend we saw at the start of the week. This is not consistent with what we are seeing from the pair, as the Canadian dollar has posted slight gains against the US currency. The ratio continues to be made up of a majority of short positions, indicating a trader bias towards the Canadian dollar continuing to move upwards.

USD/CAD has steadied but remains at high levels.  Early in the North American session, we are seeing little activity from the pair.

 

USD/CAD Fundamentals

 

*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 [4]

Market Analyst at OANDA [5]
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

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