The Canadian dollar is in free-fall on Wednesday, as USD/CAD has soared, gaining close to 200 points. In North American trade, the pair is trading just shy of the 1.23 line. In today’s releases, the Bank of Canada unexpectedly lower rates from 1.00% to 0.75%. In the US, Canadian Wholesale Sales declined by 0.2%, short of expectations. In the US, today’s releases painted a mixed picture. Building Permits fell short of expectations, coming in at 1.03 million. Housing Starts was up sharply, improving to 1.09 million.
Things have gone from bad to worse for the Canadian currency, which continues to get hammered by the US dollar. USD/CAD has surged almost 400 points since early Tuesday. The last time USD/CAD was at this level was back in April of 2009. The Canadian dollar has reacted sharply to a decline of -0.2% in Wholesale Sales, as well as to the shocking rate cut by the Bank of Canada. With oil prices having fallen by 50% since the summer, the BOC expects the ramifications on inflation, exports and consumer spending to be substantial. In Wednesday’s rate statement, the BOC said that the rate cut is intended to restore economic output, and expressed the hope that a strong US economy would boost Canadian growth as well.
USD/CAD for Wednesday, January 21, 2015
USD/CAD January 21 at 16:00 GMT
USD/CAD 1.2285 H: 1.2324 L: 1.2064
- USD/CAD has soared higher on Wednesday, breaking past several resistance lines. The pair was almost unchanged in the Asian and European sessions, before climbing sharply in North American trade.
- 1.2387 is a strong resistance line.
- 1.2261 has reverted to support and is a weak line. 1.2190 is next.
- Current range: 1.2261 to 1.2387
Further levels in both directions:
- Below: 1.2261, 1.2190, 1.2096, 1.1975 and 1.1875
- Above: 1.2387, 1.2469, 1.2543 and 1.2680
OANDA’s Open Positions Ratio
USD/CAD ratio is pointing to gains in short positions on Wednesday. This is not consistent with the pair’s movement, as the pair has posted sharp gains. The ratio has a majority of short positions, indicative of trader bias towards the Canadian dollar reversing its current slide and moving to higher ground.
- 13:30 Canadian Wholesale Sales. Estimate +0.2%. Actual -0.3%.
- 13:30 US Building Permits. Estimate 1.06M. Actual 1.03M.
- 13:30 US Housing Starts. Estimate 1.04M. Actual 1.09M.
- 15:00 BOC Monetary Policy Report.
- 15:00 BOC Rate Statement.
- 15:00 BOC Overnight Rate. Estimate 1.00%. Actual 0.75%.
- 16:15 BOC Press Conference.
*Key releases are highlighted in bold
*All release times are GMT