Seeking Alpha
Currencies, macro, fixed income
Profile| Send Message|
( followers)

By Kenny Fisher

The Canadian dollar has edged lower on Wednesday. In the North American session, USD/CAD is trading at the 1.11 line. In the US, it's a quiet day, with just two releases on the schedule, led by New Home Sales. There are no Canadian releases on Wednesday.

Another key US release, another disappointing reading - this has been the recent unhappy pattern that we continue to see. The culprit on Tuesday was CB Consumer Confidence. The indicator dropped to 78.1 points, sharply lower than the estimate of 80.7 points in December. The estimate stood at 80.2 points. This is yet another key US release that has pointed downwards in January, following in the footsteps of Building Permits, the Philly Fed Manufacturing Index and Existing Home Sales. The markets will be looking for a turnaround or we could see the US dollar lose ground against its major rivals.

Is the US housing sector experiencing a downturn? Recent US numbers have not looked sharp, and the weak numbers are being felt in the housing industry. Building Permits slid to a five-month low in January, dropping to 0.94 million. The estimate stood at 0.98 million. Existing Home Sales looked awful, dropping to 4.62 million in January, compared to 4.87 million a month earlier. This was well short of the estimate of 4.73 million, and the lowest reading from the key indicator since July 2012. The markets will be hoping for better news from New Home Sales, which will be released on Wednesday.

Last week's Federal Reserve minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also indicated that the Fed will likely continue trimming QE, barring any downturns in the economy.

USD/CAD for Wednesday, February 26, 2014

Forex Rate Graph 21/1/13

USD/CAD February 26 at 15:20 GMT

USD/CAD 1.1100 H: 1.1106 L: 1.1073

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0906 1.1000 1.1094 1.1177 1.1319 1.1496

  • USD/CAD has edged higher in Wednesday trade.
  • The key level of 1.1000 is providing support. This is followed by a support level at 1.0906, protecting the 1.09 line.
  • On the upside, 1.1094 is under pressure and could be tested during the day. 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 1.0706
  • Above: 1.1094, 1.1177, 1.1319, 1.1496 and 1.1639

OANDA's Open Positions Ratio

USD/CAD ratio is almost unchanged in Wednesday trading, pointing to gains in long positions. This is consistent with what we are seeing from the pair, as the pair is showing little movement. The ratio has a majority of short positions, indicating trader bias towards the loonie moving to higher ground.

The Canadian dollar continues to trade close to the 1.11 level. The pair is steady in the North American session.

USD/CAD Fundamentals

  • 15:00 US New Home Sales. Exp. 406K.
  • 15:30 US Crude Oil Inventories. Exp. 1.1M.

*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.