USD/CAD - Loonie's Woes Continue As U.S. Manufacturing Data Falters

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 |  Includes: FXC, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

The struggling Canadian dollar continues to lose ground in Tuesday trading. Early in the North American session, USD/CAD is trading in the mid-1.11 range. In economic news, US manufacturing data was dismal, as Core Durable Goods Orders and Durable Goods Orders both posted declines in December. CB Consumer Confidence surprised the markets by crossing above the 80-point level. There are no Canadian releases until Friday.

In the US, Core Durable Goods Orders posted another decline, its sixth in seven readings. The key manufacturing release fell 1.6%, well short of the estimate of a 0.7% gain. It was the indicator's sharpest drop since August 2012. There was no relief from Durable Goods Orders, which plunged lower by 4.3%, nowhere near the estimate of 1.9%. CB Consumer Confidence looked much sharper, climbing to 80.7 points, up from 78.1 a month earlier. The estimate stood at 78.3 points.

The Canadian dollar continues to trade at three-year lows against the US currency. The loonie slipped over 100 points last week, and has slipped another 100 points this week. The loonie has had a miserable January, giving up over 600 points to the surging US dollar. 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 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 Tuesday, January 28, 2014

Forex Rate Graph 21/1/13

USD/CAD January 28 at 15:00 GMT

USD/CAD 1.1157 H: 1.1177 L: 1.1078

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0906 1.1000 1.1094 1.1177 1.1319 1.1496
Click to enlarge
  • USD/CAD continues to move upwards in Tuesday trading. The pair pushed across the 1.11 line early in the European session and continues to push towards the 1.12 line.
  • 1.1094 has reverted back to a support role. This is followed by support at the key level of 1.1000.
  • On the upside, 1.1177 is providing resistance. This is a weak line which could break if the Canadian dollar continues to lose ground. This is followed by resistance at 1.319, which has remained intact since July 2009.
  • Current range: 1.1094 to 1.1177

Further levels in both directions:

  • Below: 1.1094, 1.1000, 1.0906, 1.0852 and 1.0783
  • Above: 1.1177, 1.1319, 1.1496 and 1.1610

OANDA's Open Positions Ratio

USD/CAD ratio has reversed directions in Tuesday trading, pointing to gains in short positions. This is consistent with what we are seeing from the pair, as the US dollar continues to move to higher levels. The ratio is made up of a majority of short positions, indicating a trader bias towards the Canadian dollar reversing directions and moving to higher ground.

The Canadian dollar continues to slide in Tuesday trading. USD/CAD has been on the move all day and the loonie remains under pressure in the North American session.

USD/CAD Fundamentals

  • 13:30 US Core Durable Goods Orders. Estimate 0.7%. Actual -1.7%.
  • 13:30 US Durable Goods Orders. Estimate 1.9%. Actual -4.3%.
  • 14:00 US S&P/CS Composite-20 HPI. Estimate 13.7%. Actual 13.7%.
  • 15:00 US Richmond Manufacturing Index. Estimate 13 points. Actual 12 points.
  • 15:00 US CB Consumer Confidence. Estimate 78.3 points. Actual 80.7 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.