USD/CAD - Rangebound As Canadian Inflation Jumps

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

By Kenny Fisher

USD/CAD is listless in Tuesday trading, as pair continues to trade in the mid-1.10 range in Monday's North American session. The Canadian dollar has showed some surprising strength, gaining about two cents in the past week. In economic news, Canadian RMPI, an important inflation indicator, jumped 5.2%, its sharpest gain in almost three years. In the US, ISM Manufacturing PMI missed the estimate.

Canadian inflation has been persistently weak, but Raw Materials Price Index surprised the markets on Tuesday with a huge gain of 5.7%, crushing the estimate of 2.3%. This was the third straight gain for the index and its best showing since April 2011. Is inflation on the rise in Canada? Better inflation numbers would indicate a stronger economy and could give a boost to the Canadian dollar. The week started on a high note as GDP bounced back after a decline in January, posting a healthy gain of 0.5%. This edged above the estimate of 0.4%. This is the best showing we've seen from GDP since last August, and has helped the Canadian dollar rally against its US counterpart.

On Monday, Fed chair Janet Yellen said that "considerable slack" remained in the US economy and this would require further stimulus measures. Currently, the Fed is purchasing $55 billion in assets under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence. At the same time, the Federal Reserve has stated that its has no plans to raise interest rates until sometime in 2015.

USD/CAD for Tuesday, April 1, 2014

Forex Rate Graph 21/1/13

USD/CAD April 1 at 15:40 GMT

USD/CAD 1.1048 H: 1.1056 L: 1.1041

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0852 1.0906 1.1000 1.1094 1.1177 1.1319
Click to enlarge
  • USD/CAD is rangebound in Tuesday trading.
  • On the downside, the key line of 1.1000 is providing support. There is stronger support at 1.0906, which is protecting the 1.09 level.
  • 1.1094 is the next resistance line. This is followed by 1.1177.
  • Current range: 1.1000 to 1.1094

Further levels in both directions:

  • Below: 1.1000, 1.0906, 1.0852 and 1.0775
  • Above: 1.1094, 1.1177, 1.1319, 1.1496 and 1.1639

OANDA's Open Positions Ratio

USD/CAD ratio is almost unchanged on Tuesday, continuing the trend we saw at the start of the week. The ratio has a slight majority of open long positions, indicating a slight trader bias to USD/CAD reversing its downward direction.

USD/CAD continues to trade in the mid-1.10 range on Tuesday. Will the Canadian dollar resume its rally and push towards the key 1.10 line? The pair is steady in the North American session.

USD/CAD Fundamentals

  • 12:30 Canadian GDP. Estimate 0.4%. Actual 0.5%.
  • 13:45 US Chicago PMI. Estimate 59.2 points.
  • 13:55 US Federal Reserve Chair Janet Yellen 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