USD/CAD - Slight Losses As U.S. Posts Mixed Numbers

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

By Kenny Fisher

USD/CAD has edged lower in Tuesday trading, as the pair trades in the high-1.11 range. On the release front, US data pointed in both directions on Tuesday. Consumer Confidence sparkled, hitting a six-year high, but New Home Sales weakened in February and fell short of the estimate. There are no Canadian releases for the remainder of the week.

US data was a mix on Tuesday and USD/CAD has showed little reaction. CB Consumer Confidence jumped to 82.3 points, easily surpassing the estimate of 78.7 points. This was the key indicator's best showing since December 2007. An increase in consumer sentiment usually translates into consumer spending, which is a critical component of economic growth. The news wasn't as good from the housing sector, as New Home Sales fell to 440 thousand, down sharply from the January release of 468 thousand. The reading was short of the estimate of 447 thousand. We'll get a look at Pending Home Sales later in the week.

Last week's FOMC meeting, the first with Janet Yellen as Fed chair, was dramatic. The decision to trim QE by another $10 billion was widely expected, but her comments at the follow-up press conference gave the dollar a big boost against its major rivals. Yellen said that the Fed was on track to wind up QE in the fall, and could start to raise interest rates six months later. This is a more aggressive approach towards higher rates than the markets had expected and the US dollar was up sharply against the Canadian currency.

World markets have until now managed to avoid much fallout from the Ukrainian crisis, although the situation remains very tense. Western countries are scrambling to respond to Russia's lightning takeover of the Ukrainian region. The G-7 is holding an emergency meeting in the Hague, and it seems likely that more sanctions will be leveled against Russia. Meanwhile, Ukraine says it has ordered its troops in Crimea to withdraw to the mainland, which marks a tacit recognition of the Russian annexation of Crimea. The situation in Ukraine is the most severe crisis in East-West relations since the Cold War ended, and we're likely to see further developments which could affect the markets.

USD/CAD for Tuesday, March 25, 2014

Forex Rate Graph 21/1/13

USD/CAD March 25 at 14:45 GMT

USD/CAD 1.1178 H: 1.1211 L: 1.1170

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.10 1.1094 1.1177 1.1319 1.1496 1.1639
Click to enlarge
  • USD/CAD has edged lower in Tuesday trade. The pair dropped to a low of 1.1202 early in the North American session.
  • On the downside, the pair is testing 1.1177. There is stronger support at 1.1094.
  • 1.1319 is the next resistance line. It is followed by resistance at 1.1496, which has held firm since July 2009.
  • Current range: 1.1177 to 1.1319

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 gains in long positions in Tuesday trade. This is not consistent with what we are seeing from the pair, as the US dollar has edged lower. The ratio has a strong majority of short positions, indicating trader bias towards the loonie gaining ground against the US currency.

USD/CAD continues to trade close to the 1.12 level. The pair has edged lower in the North American session.

USD/CAD Fundamentals

  • 13:00 US S&P/CS Composite-20 HPI. Estimate 13.3%. Actual 13.2%.
  • 13:00 US HPI. Estimate 0.7%. Actual 0.5%.
  • 13:59 US Richmond Manufacturing Index. Estimate -1 point. Actual -7 points.
  • 14:00 US CB Consumer Confidence. Estimate 78.7 points. Actual 82.3 points.
  • 14:00 US New Home Sales. Estimate 447K. Actual 440K.
  • 23:00 US FOMC Member Charles Plosser Speaks.

*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.