USD/CAD – Limited Movement in Holiday-thinned Trade

It’s all quiet for USD/CAD on Thursday, as the pair trades slightly under the 1.39 line in the European session. Trade is expected to be subdued ahead of New Year’s, and there is only one US event on the schedule. Unemployment Claims is expected to rise to 274 thousand. There are no Canadian events scheduled for this week.

In the US, Pending Home Sales was unexpectedly soft, posting a decline of 0.9%, compared to an estimate of a 0.6% gain. Recent housing indicators have missed expectations, pointing to weakness in the US housing sector. Meanwhile, CB Consumer Confidence sparkled in the December report, as the key indicator jumped to 96.5 points, up sharply from 90.4 points a month earlier. This easily beat the estimate of 93.9 points. This excellent reading followed a solid UoM Consumer Sentiment, which improved to 92.6 points, above the forecast of 92.1 points and marking a 4-month high. Consumer confidence indicators are closely monitored by analysts, as stronger consumer confidence often translates into increased consumer spending, a key driver of economic growth. Strong consumer demand has been an important factor in the strength of the US economy, which led to the historic rate hike by the Federal Reserve earlier in December.

December hasn’t provided the Canadian dollar with any holiday cheer, as the currency has plunged almost 600 points against the mighty US dollar during this time. USD/CAD is trading close to 11-year lows, as the pair remains within striking distance of the symbolic 1.40 line. Recent key data has failed to impress, as Canada’s economy continues to struggle. Canada’s GDP for October came in at a flat 0.0%, pointing to a lack of economic growth. Although by no means an impressive reading, this was nonetheless an improvement over the September reading of -0.5%. Core Retail Sales followed suit, also posting a flat reading of 0.0%. There are no real surprises in these weak figures, as the Canadian economy has been hit hard by the steep decline in oil prices in 2015. The Canadian dollar, a commodity-based currency, has also taken a hard hit against its US counterpart? If the current trend continues, we could see USD/CAD move above the symbolic 1.40 level early in the New Year.

Thursday (Dec. 31)

  • 13:30 US Unemployment Claims. Estimate 274K
  • 14:45 US Chicago PMI. Estimate 50.4 points
  • 15:30 US Natural Gas Storage. Estimate -54B

USD/CAD for Thursday, December 31, 2015

USD/CAD December 31 at 10:20 GMT

USD/CAD 1.3895 H: 1.3902 L: 1.3865

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.3640 1.3757 1.3865 1.40 1.4165 1.4310
  • USD/CAD posted light losses in the Asian session and has recovered in European trade.
  • 1.3865 is providing support. It remains a weak line.
  • There is resistance at the round number of 1.40.
  • Current range: 1.3865 to 1.40

Further levels in both directions:

  • Below: 1.3865, 1.3757, 1.364o and 1,3555
  • Above: 1.40, 1.4165 and 1.4310

OANDA’s Open Positions Ratio

USD/CAD ratio is showing some movement towards long positions. Short positions still retain a commanding majority (64%), indicative of trader bias towards USD/CAD moving lower.

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.