The Canadian dollar continues to have an uneventful week, as USD/CAD trades in the mid-1.07 range late in the North American session. On the release front, Canadian data was weak, as Canadian Core Retail Sales and Retail Sales both softened in June. In the US, today’s sole event is Crude Oil Inventories.
Canadian retail sales data was a major disappointment. Core Retail Sales slipped to 0.1% last month, compared to 0.7% in the previous release. This missed the estimate of 0.3%. Retail Sales came in at 0.7%, compared to 1.1% in the May reading. This was enough to beat the estimate, which stood at 0.6%. These are the only Canadian releases this week, so the movement of USD/CAD for the remainder of the week will be heavily dependent on US data.
US numbers were a mix on Tuesday. Inflation numbers continue to struggle, as Core CPI posted a paltry gain of 0.1%, shy of the estimate of 0.2%. The key index has looked anemic in 2014, with its highest gain this year at just 0.3%. CPI was bit stronger, as it gained 0.3% last month, matching the forecast. Meanwhile, Existing Home Sales jumped to 5.04 million, surpassing the estimate of 4.94 million. This was the best showing we’ve seen since October, and follows a disappointing release from Housing Starts, which was published last week.
Geopolitical tensions are bad news for the markets, which crave stability. With violence continuing in Ukraine and Gaza, nervous investors continue to eye the safe-haven US dollar, so the yen could see some pressure. In Ukraine, the downing of a Malaysian Airlines jet, apparently by pro-Russian separatists, has seriously frayed relations between the West and Russia, which have already been strained since the latter annexed Crimea. Fighting continues between the separatists and Ukrainian forces in Eastern Ukraine. The Europeans are threatening stronger sanctions against Russia, and escalating tensions in eastern Ukraine could shake up the markets. In the Middle East, the fighting in Gaza between Hamas and Israel has intensified, as Israel presses on with a land offensive and casualties rise on both sides. Meanwhile, the international community is intensifying efforts to broker a cease-fire, but in the meantime the fighting continues.
USD/CAD for Wednesday, July 23, 2014
USD/CAD July 23 at 15:50 GMT
USD/CAD 1.0740 H: 1.0743 L: 1.0711
- USD/CAD lost ground in the Asian session, but has since rebounded. The Canadian dollar is under pressure in the North American session.
- On the upside, 1.0775 is an immediate resistance line. 1.0852 is stronger.
- 1.0678 is providing support. 1.0572 is next.
- Current range: 1.0678 to 1.0775
Further levels in both directions:
- Below: 1.0678, 1.0572, 1.0414 and 1.0271
- Above: 1.0775, 1.0852, 1.0961 and 1.1004
OANDA’s Open Positions Ratio
USD/CAD ratio is pointing to gains in long positions on Wednesday. This is consistent with the pair’s movement, as the US dollar has posted small gains. The ratio has a substantial majority of long positions, indicative of strong trader bias towards the US dollar gaining ground.
- 12:30 Canadian Core Retail Sales. Estimate 0.3%. Actual 0.1%.
- 12:30 Canadian Retail Sales. Estimate 0.6%. Actual 0.7%.
- 14:30 US Crude Oil Inventories. Estimate -2.1M. Actual -4.0M.
*Key releases are highlighted in bold
*All release times are GMT