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By Kenny Fisher

The Canadian dollar has picked up where it left off last week, posting gains against its U.S. counterpart. USD/CAD has dropped close to a cent since Wednesday, and the pair is testing the 1.04 line on the downside. In economic news, It's a quiet day in the U.S., with Factory Orders for August and September the only economic releases on the schedule. The only item out of Canada is a speech by BOC Deputy Governor Lawrence Schembri.

The Federal Reserve met for a policy meeting last week, the first since Congress reached an agreement on the debt ceiling and the shutdown. As expected, the Fed said that it would maintain QE at current levels of $85 billion each month. However, the Fed's policy statement was less dovish than expected, as the Fed noted that the economy was expanding "at a moderate pace" and left the door open for QE tapering in December. However, the prevailing view in the markets is that short of a sharp turnaround in U.S. numbers, QE tapering will be on hold until early 2014.

After a host of weak numbers early in the week, U.S. numbers showed some improvement. Unemployment Claims practically matched the forecast, and ISM Manufacturing PMI beat the estimate. With the Fed unlikely to taper QE before 2014, the QE uncertainty which was has been weighing on the dollar has eased, which could bolster the U.S. dollar.

Unlike countries such as the U.S. and the U.K., Canada releases GDP on a monthly, rather than quarterly basis. On Thursday, the September GDP release came in at 0.3%. Although the indicator dropped from 0.6% in August, the Canadian dollar gained ground, as the reading beat the estimate of 0.2%. However, with the Canadian economy marked by low inflation and weak growth, the loonie will have trouble making inroads against the U.S. dollar if Canadian data fails to show significant improvement.

USD/CAD for Monday, November 4, 2013

Forex Rate Graph 21/1/13

USD/CAD November 4 at 13:00 GMT

USD/CAD 1.0401 H: 1.0428 L: 1.0398

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0224 1.0282 1.0337 1.0442 1.0502 1.0573

  • USD/CAD continues to lose ground on Monday and continues to trade close to the 1.04 line.
  • The pair is facing resistance at 1.0442. This is a weak line which could be breached if the U.S. dollar recovers. This is followed by a resistance line at 1.0502.
  • USD/CAD is receiving support at 1.0337. This is followed by a support level at 1.0282, which was the low point when the U.S. dollar started an upward run about 10 days ago.
  • Current range: 1.0337 to 1.0442

Further levels in both directions:

  • Below: 1.0337, 1.0282, 1.0224 and 1.0158
  • Above 1.0442, 1.0502, 1.0573, 1.0652 and 1.0837

OANDA's Open Positions Ratio

A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar moving higher.

The Canadian dollar has posted modest gains to start the week. With no major events on Monday's schedule, it could be an uneventful North American session for USD/CAD.

USD/CAD Fundamentals

  • 12:30 BOC Deputy Governor Lawrence Schembri Speaks. Schembri will address the CD Howe Policy Conference in Toronto.
  • 15:00 U.S. Factory Orders. Estimate 1.9%.
  • 15:00 U.S. Factory Orders (Aug. Data). Estimate 0.2%.
  • 16:40 U.S. FOMC Member Jerome Powell Speaks.
  • 21:00 U.S. FOMC Member Eric Rosengren Speaks.

*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.

Source: USD/CAD - Canadian Dollar Continues Pressure On Greenback