The Canadian dollar has started the week with modest gains. Early in the North American session, USD/CAD is trading back below the 1.11 level. In economic news, US Existing Home Sales ended the week on a sour note, as the key indicator slumped to its lowest level since July 2012. Meanwhile, Canadian inflation numbers posted a slight gain, while retail sales slumped badly. Monday has little action, as the sole US release, Flash Services PMI, slid to its lowest level since October. There are no Canadian releases on the schedule.
Canadian inflation indicators continue to point to low levels of inflation, indicative of an underperforming economy. Core CPI posted a gain of 0.2%, while CPI gained 0.3%. The estimate for both indicators stood at 0.1%. Canadian retail sales numbers were dismal in January. Core Retail Sales declined by 1.4%, its first drop since July. This was nowhere near the estimate of 0.2%. Retail Sales brought no relief, slipping by 1.8%. The estimate stood at -0.5%. Despite the bad tidings on Friday, the Canadian dollar managed to hold its own, although the currency did climb close to the 1.12 line before retracting.
US numbers failed to impress last week. After weak releases from Building Permits and the Philly Manufacturing Index, Existing Home Sales sagged on Friday, dropping to 4.62 million in January, compared to 4.87 million a month earlier. This was well short of the estimate of 4.73 million, and the lowest reading from the key indicator since July 2012. The markets will be hoping for better news from New Home Sales on Wednesday.
Last week’s Federal Reserve minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also indicated that the Fed will likely continue trimming QE, barring any downturns in the economy.
USD/CAD for Monday, February 24, 2014
USD/CAD February 24 at 16:00 GMT
USD/CAD 1.1068 H: 1.1143 L: 1.1064
- USD/CAD has posted losses in Monday trade. The pair dropped below the 1.11 level in the European session and continues to lose ground.
- The key level of 1.1000 is providing support. This is followed by a support level at 1.0906, protecting the 1.09 line.
- 1.1094 is the next resistance line. It is not a strong line and could see further action in the North American session. This is followed by resistance at 1.1177.
- Current range: 1.1000 to 1.1094
Further levels in both directions:
- Below: 1.1000, 1.0906, 1.0852, 1.0783 and 1.0706
- Above: 1.1094, 1.1177, 1.1319 and 1.1496
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 gains. The ratio has a majority of short positions, indicating trader bias towards the loonie continuing to move to higher ground.
The Canadian dollar has posted gains to start the week. In Monday’s North American session, the currency continues to put pressure on the US dollar.
14:00 US Flash Services PMI. Estimate 56.9 points. Actual 52.7 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.