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USD/CAD: Steady as US GDP Takes a Beating

USD/CAD has edged lower on Wednesday, as the pair trades in the low-1.07 range. On the release front, US GDP took a tumble in Q1, while manufacturing data softened in May. There are no Canadian releases until Friday.

The US dollar is under pressure following a dismal Final GDP reading in Q1. The markets were braced for a decline of 1.8%, but the indicator shocked with a much sharper drop of 2.9%. There was more bad news to follow, as Core Durable Goods Orders declined by 0.1%, its first decline in five months. The estimate stood at 0.3%. Durable Goods Orders looked even worse, coming in at -1.0%, shy of the estimate of -0.1%. Traders should be prepared for the US dollar’s major rivals to gain ground after such a weak GDP release.

US data looked sharp on Tuesday, with strong gains in consumer confidence and housing numbers. CB Consumer Confidence improved to 85.2 points, beating the estimate of 83.6 points. It was the strongest level since December 2007. New Home Sales had a superb reading, jumping to 504 thousand, crushing the estimate of 442 thousand. It was the key indicator’s best showing since August 2008. If upcoming indicators continue to point upwards, we could see the US dollar gain strength.

The Canadian dollar continues to trade at its highest levels since January. The currency received a boost from strong releases last week, highlighted by positive inflation and retail sales numbers last Friday. Core CPI and CPI both posted gains of 0..5%, beating their estimates of 0.2%. Core Retail Sales improved to 0.7%, surpassing the forecast of 0.4%. Finally, Retail Sales jumped 1.1% last month, crushing the estimate of 0.4%.

 

USD/CAD for Wednesday, June 25, 2014

USD/CAD June 25 at 14:40 GMT

USD/CAD 1.0723 H: 1.0752 L: 1.0719

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0572 1.0678 1.0706 1.0775 1.0852 1.0906

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in Wednesday trade, continuing the trend we saw a day earlier. This is not consistent with the pair’s movement, as USD/CAD has edged lower. The ratio has a majority of long positions, indicative of trader bias towards the US dollar breaking out and moving higher.

 

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]

Currency Analyst at Market Pulse [5]
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.