USD/CAD – Back Above 1.10 as Canadian Dollar Slips

USD/CAD has moved sharply higher at the start of the trading week, as the pair trades slightly above the 1.10 line on Monday. On the release front, US Existing Home Sales sputtered, as the indicator dropped sharply to 5.05 million last month. Today’s sole release from Canada is a speech by BOC Senior Deputy Governor Carolyn Wilkins at an event in Toronto.

US Existing Home Sales didn’t impress, slipping to 5.05 million, compared to 5.15 million in the previous release. This was way off the estimate of 5.21 million. The indicator had exceeded the estimate in the past three releases, so the weak numbers disappointed the markets. We’ll get a look at New Home Sales on Wednesday.

On Friday, Canadian key numbers were a mix. There was unexpected good news from Canada’s inflation front, as Core CPI jumped 0.5% in August, compared to reading of -0.1% a month earlier. This beat the estimate of 0.2%. CPI improved to 0.0%, ahead of the forecast of -0.2%. However, Wholesale Sales slipped to a 4-month low at -0.3%, way off the estimate of +0.8%. Earlier last week, Manufacturing Sales, a key release, jumped 2.5% in August. This easily beat the estimate of 1.1%.

The Federal Reserve released a highly-anticipated policy statement on Wednesday. The statement reaffirmed that interest rates would remain ultra-low for a “considerable time” after the asset purchase scheme (QE) ends next month, but surprised the markets in hinting that once a rate hike was introduced, rate levels could move up more quickly than expected. As expected, the Fed trimmed QE by $10 billion/month, and the remaining $15 billion/month is scheduled to be phased out in October.

USD/CAD for Monday, September 22, 2014

USD/CAD September 22 at 14:20 GMT

USD/CAD 1.1014 H: 1.1014 L: 1.0926

USD/CAD Technical

• USD/CAD edged lower in the Asian session but then reversed directions and continued to gain ground in the European session. In the North American session, the pair has broken past resistance at 1.1004.
• 1.1124 is a strong resistance line.
• 1.1004 has reverted to a support role. This line is fluid and could see further action. 1.0961 is the next support level.
• Current range: 1.1004 to 1.1124

Further levels in both directions:

• Below: 1.1004, 1.0961, 1.0852, 1.0775, and 1.0678
• Above: 1.1124, 1.1278, 1.1414 and 1.1493

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Monday. This is not consistent with the movement of the pair, as the Canadian dollar has posted strong losses. The ratio has a majority of long positions, indicating trader bias towards the US dollar continuing to move higher.

USD/CAD Fundamentals

• 14:00 US Existing Home Sales. Estimate 5.21M. Actual 5.05M.
• 14:05 US FOMC Member William Dudley Speaks.
• 23:30 US FOMC Member Narayana Kocherlakota Speaks.

* Key releases are in highlighted bold.

*All release times are GMT

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