By Kenny Fisher
The struggling Canadian dollar has steadied as we begin the new trading week. In Monday's North American session, USD/CAD is trading in the mid-1.10 range. It's a quiet start to the week, with just two releases. Today's key event is US New Home Sales which dropped to a three-month low, well below the estimate. US Flash Services PMI met expectations. There are no Canadian releases scheduled until Friday.
The Canadian dollar continues to trade at three-year lows against the US currency. The loonie slipped over 100 points last week, as USD/CAD came close to the 1.12 level. As expected, the Bank of Canada kept the benchmark interest rate pegged at 1.0% late last week. However, the Canadian dollar took a hit as the markets reacted negatively to the BOC's policy statement, in which the Bank noted that it was increasingly concerned about persistently low inflation. The loonie lost over one cent after the BOC release, despite solid Canadian retail sales numbers late last week.
The health of the US housing sector continues to concern the markets, as New Home Sales dropped sharply in December to 414 thousand, down from 464 thousand a month earlier. This was nowhere near the estimate of 457 thousand. This follows a disappointing Existing Home Sales release last week. The key indicator dropped to 4.87 million, down from 4.90 million a month earlier and shy of the estimate of the 4.94 million. This was the indicator's fourth straight drop. The markets will be hoping for better news from Pending Home Sales on Thursday.
USD/CAD for Monday, January 27, 2014
USD/CAD January 27 at 15:50 GMT
USD/CAD 1.1064 H: 1.1073 L: 1.1032
- USD/CAD is steady in Monday trading. The pair lost ground during the European session but has recovered in North American trading.
- The key level of 1.1000 is providing support. This is followed by stronger support at 1.0906.
- On the upside, 1.1094 has switched back to a resistance role. This is a weak line which could be tested if the US dollar resumes its upward movement. This is followed by resistance at 1.1177.
- Current range: 1.1000 to 1.1094
Further levels in both directions:
- Below: 1.1000, 1.0906, 1.0852, 1.0783 and 1.0652
- Above: 1.1094, 1.1177, 1.1319, 1.1496 and 1.1610
OANDA's Open Positions Ratio
USD/CAD ratio is pointing to gains in long positions in Monday trading. This is not reflective of what we are seeing from the pair, which is not showing much movement. The ratio is made up of a majority of short positions, indicating a trader bias towards the Canadian dollar moving to higher ground.
The Canadian dollar has steadied as we start the new week. The pair has edged higher in the North American session.
- 13:30 US New Home Sales. Estimate 457K. Actual 414K.
- 14:00 US Flash Services PMI. Estimate 56.2 points. Actual 56.6 points.
*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.