The Canadian dollar continues to flex some muscle, as USD/CAD has dropped below the 1.09 line on Wednesday. The loonie found itself staring at the key 1.10 level at the start of Tuesday trading, but has since gained about 100 points. It’s a very quiet day on the release front, with just one US event on the schedule, Crude Oil Inventories. There no Canadian releases on Wednesday.
There are hopes for some progress in the Ukraine crisis, as Russian president Vladimir Putin met with his Ukrainian counterpart Petro Poroshenko in Minsk on Tuesday. The meeting was discussed as “positive”, but fighting between Ukrainian forces and pro-Russian militants continues. The crisis has plunged relations between Russia and the West to their lowest levels since the Cold War. Europe and the US have imposed sanctions and Moscow has been quick to retaliate. The impasse could have a significant impact on the economies of Russia and Europe and have a negative effect on global markets.
US durables painted a mixed picture on Tuesday. Core Durable Goods Orders, a key indicator, came in at -0.8%, its worst showing in 2014. This was nowhere near the estimate of +0.5%. At the same time, Durable Goods Orders stunned the markets with a record gain of 22.6%. The reason? A huge increase in the purchase of passenger planes in July. The sharp jump did not have much effect on the dollar, and the indicator is expected to return to normal levels next month.
There was some speculation that the recent economic meeting in Jackson Hole might be a market-mover, so the markets were all ears as Fed chair Janet Yellen delivered the keynote address on Friday. Any hopes for some dramatic news were dashed, however, as Yellen did not provide any clues as to the timing of a rate hike. She reiterated that the US job market still needed to improve, so employment numbers remain a crucial factor in any rate move by the Fed. There is divergence in monetary stance between the ECB and the Federal Reserve. The Fed is close to winding up QE, while the ECB may step in and provide stimulus to bolster the Eurozone economy.
USD/CAD for Wednesday, August 27, 2014
USD/CAD August 27 at 13:55 GMT
USD/CAD 1.0894 H: 1.0953 L: 1.0890
- USD/CAD posted strong losses in the Asian session and dropped below the 1.09 level in the European session. The US dollar remains under pressure in North American trade.
- 1.0852 is an immediate support line. 1.0775 is stronger.
- 1.0961 has reverted to a resistance role as the Canadian dollar continues to improve. 1.1004 is the next resistance line.
- Current range: 1.0852 to 1.0961
Further levels in both directions:
- Below: 1.0852, 1.0775, 1.0678 and 1.0588
- Above: 1.0961, 1.1004, 1.1124 and 1.1278
OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged in Wednesday trade. This is not consistent with the pair’s current movement, as the Canadian dollar continues to post gains. The ratio has a slight majority of long positions, indicating modest trader bias towards the US dollar reversing its downward slide.
14:30 US Crude Oil Inventories. Estimate 1.1M.
* Key releases are in highlighted bold.
*All release times are GMT