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USD/CAD – Little Change as US, Canadian Key Data Disappoints

The Canadian dollar is unchanged on Wednesday, as USD/CAD trades quietly in the mid-1.16 range. The markets are keeping a close eye on the Federal Reserve, which will release a policy statement later in the day. On the release front, data on both sides of the border was a disappointment. Canadian Wholesale Sales posted a weak gain of 0.1%, well off expectations. In the US, CPI disappointed, posting a decline of 0.3%. Core CPI posted a small gain of 0.1%.

Canadian Wholesales Sales was unexpectedly weak in October, as the key indicator slipped to 0.1%, compared to a strong gain of 1.8% a month earlier. The estimate stood at 0.9%. On Tuesday, Canadian Manufacturing Sales declined by 0.6%, compared to a gain of 2.1% in the previous release. Despite these poor key releases, the Canadian dollar has managed to hold its own against its US counterpart.

Over in the US, inflation indicators continue to look very weak. CPI, the primary gauge of consumer inflation, dropped 0.3%, below the estimate of -0.1%. This was the indicator’s weakest reading in over a year. Core CPI posted a weak gain of 0.1%, matching the forecast. The Federal Reserve will be in the spotlight on Wednesday, as the FOMC issues its monthly policy statement. With the US economy continuing to grow, the markets are confident that the Fed will take action and raise interest rates in the first half of 2015. One key question is whether the Fed will adjust its forward guidance; that is, will the Fed make use of policy statements to provide the markets with more information about its projections regarding interest rate policy. If this does occur, there will be less uncertainty about the Fed’s monetary policy and this could boost the US dollar against its major rivals.

USD/CAD for Wednesday, December 17, 2014

USD/CAD December 17 at 15:00 GMT

USD/CAD 1.1642 H: 1.1660 L: 1.1623

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.1278 1.1414 1.1493 1.1669 1.1723 1.1875

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions on Wednesday, reversing the direction seen a day earlier. This is not consistent with the movement of the pair, as the Canadian dollar is unchanged on the day. The ratio has a majority of short positions, indicative of trader bias towards USD/CAD moving to lower ground.

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.