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By Kenny Fisher

USD/CAD continues to lose ground on Wednesday, as the pair has climbed close to the 1.12 line. In economic news, the markets await the Federal Reserve's policy statement, with another trim to QE widely expected. In Canada, Wholesale Sales bounced back in February but still fell short of expectations.

Canadian Wholesale Sales, an important gauge of consumer spending, posted a gain of 0.8%, compared with a 1.4% decline a month earlier. However, the markets had expected a gain of 1.2%. There was better news on Tuesday, Canadian Manufacturing Sales, a key event, jumped 1.5% in February, its best showing since last August. This easily beat the estimate of 1.1%. The strong release failed to boost the retreating Canadian dollar, which is flirting with the 1.12 line.

Will we see another QE trim on Wednesday? The US Federal Reserve concludes its policy meeting on Wednesday, its first meeting under the tutelage of Janet Yellen. Recent US numbers haven't dazzled, but they should be strong enough for the Federal Reserve to go ahead with another taper of QE. This would be the third trim of the Fed's asset-buying scheme, and would reduce QE to $55 billion per month. These tapers are dollar-positive and mark a vote of confidence in the US economy by the Fed, so a taper could give the US a push upwards.

Events are moving fast in the Ukrainian crisis. Voters in Crimea voted overwhelmingly to join Russia in a referendum on Sunday. The next day, Russian Prime Minister Putin formally recognized Crimea as an independent state, paving the way for annexation. The EU and US have slapped targeted sanctions against high-ranking Russian officials, and Western leaders plan to meet during the week to discuss a united strategy to respond to the crisis. The instability and uncertainty gripping world capitals has not helped the fortunes of the Canadian dollar, as nervous investors seek the safety of the US dollar.

USD/CAD for Wednesday, March 19, 2014

Forex Rate Graph 21/1/13

USD/CAD March 19 at 14:50 GMT

USD/CAD 1.1185 H: 1.1199 L: 1.1122

  • USD/CAD continues to move higher in Wednesday trading. The pair touched a high of 1.1199 earlier in the North American session.
  • 1.1177 has switched to a support role as the Canadian dollar continues to lose ground. It is a fluid line and could see more action during the day. Next is support at 1.1319.
  • 1.1094 is providing support. This line has strengthened as the pair moves higher. This is followed by the key level of 1.10.
  • Current range: 1.10 to 1.1094

Further levels in both directions:

  • Below: 1.1177, 1.1094, 1.1000, 1.0906 and 1.0852
  • Above: 1.1319, 1.1496, 1.1639 and 1.1876

OANDA's Open Positions Ratio

USD/CAD ratio is pointing to sharp gains in short positions in Wednesday, reversing the movement we saw a day earlier. This can be explained by the fact that strong losses by the Canadian dollar have resulted in numerous long positions being covered, leading to a gain in open short positions . The ratio has a strong majority of short positions, indicating trader bias towards the loonie reversing its current downward trend.

The Canadian dollar is flirting with the 1.12 line. The Canadian dollar remains under pressure early in the North American session.

USD/CAD Fundamentals

  • 12:30 Canadian Wholesale Sales. Estimate 1.2%. Actual 0.8%.
  • 12:30 US Current Account. Exp. -88B. Actual -81B.
  • 14:30 US Crude Oil Inventories. Exp. 2.4M. Actual 5.9M.
  • 18:00 US FOMC Economic Projections.
  • 18:00 US FOMC Statement.
  • 18:00 US Federal Funds Rate.
  • 18:30 US FOMC Press Conference.

*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 - Loonie Slides As Canadian Data Disappoints