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By Kenny Fisher

USD/CAD has posted strong gains in Wednesday trading, gaining about 100 points. The pair is trading in the mid-1.10 range early in the North American session. Canadian Wholesale Sales posted a decline in January and dipped to a six-month low. In the US, both Building Permits and the Producer Price Index weakened in January. The minutes of the last Federal Reserve policy meeting will be released later in the day.

Canadian Wholesale Sales looked awful, posting a decline of 1.4%, well off the estimate of -0.5%. The indicator, which is an important gauge of consumer spending has been weakening in recent months, and is another indication that the Canadian consumer is being tight with the purse strings. We'll get a look at Core Retail Sales, the most important consumer spending indicator, on Friday. The markets are expecting a weak gain of just 0.2%.

US data continues to disappoint the markets. Building Permits dipped to 0.94 million, its lowest level in five months. The indicator fell short of the estimate of 0.98 million. The Producer Price Index dropped to 0.2%, down from 0.4% a month earlier. Although the index did match the forecast, we continue to see weak inflation numbers, indicative of an underperforming economy. Core CPI will be released on Wednesday. Will we some improvement in US inflation levels?

The Federal Reserve will release the minutes of its last policy meeting later on Wednesday, and traders should pay close attention to this event, which has been a market-mover in the past. At its last meeting, the Fed trimmed QE by another $10 billion, reducing the bond-buying scheme to $65 billion each month. Fed chair Janet Yellen has said that QE could be winded up by the end of 2014, provided that the economy behaves and there are no sudden downturns, particularly on the employment front.

USD/CAD for Wednesday, February 19, 2014

Forex Rate Graph 21/1/13

USD/CAD February 19 at 15:20 GMT

USD/CAD 1.1042 H: 1.1047 L: 1.0911

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0852 1.0906 1.1000 1.1094 1.1177 1.1319

  • USD/CAD has posted strong gains in Wednesday trading. The pair climbed above the 1.10 level late in the European session and continues to move upwards in North American trading.
  • 1.1000 has reverted to a support role as the US dollar improves. This is followed by a support level at 1.0906.
  • 1.1094 is the next resistance line. This line could face pressure if the Canadian dollar continues its move southward. This is followed by resistance at 1.1177.
  • Current range: 1.1000 to 1.1177

Further levels in both directions:

  • Below: 1.1000, 1.0906, 1.0852, 1.0783 and 1.0706
  • Above: 1.1094, 1.1177, 1.1319 and 1.1496

OANDA's Open Positions Ratio

USD/CAD ratio is almost unchanged in Wednesday trading. This is not consistent with what we are seeing from the pair, as the US dollar has made strong gains. The ratio is close to evenly split between long and short positions, indicating a lack of trader bias with regard to the movement we can expect from the pair.

After a couple of days of little movement, USD/CAD has broken out on Wednesday, posting sharp gains and crossing into 1.10 territory. The pair continues to move upwards early in the North American session.

USD/CAD Fundamentals

  • 13:30 Canadian Wholesale Sales. Estimate -0.5%. Actual -1.4%.
  • 13:30 US Building Permits. Estimate 0.98M. Actual 0.94M.
  • 13:30 US PPI. Estimate 0.2%. Actual 0.2%.
  • 13:30 US Core PPI. Estimate 0.2%. Actual 0.2%.
  • 13:30 US Housing Starts. Estimate 0.95M. Actual 0.88M.
  • 19:00 US FOMC Minutes.

*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 - Greenback Barrels Above 1.10 As Canadian, U.S. Numbers Slip