USD/CAD - Little Movement As U.S. Retail Sales Slide

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Includes: FXC, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

The Canadian dollar is steady in Tuesday trading, as USD/CAD trades just shy of the 1.09 line in the North American session. On the release front, US Core Retail Sales and Retail Sales missed expectations. The lone Canadian release is the Bank of Canada Review, which is a minor event.

US Retail Sales and Core Retail Sales are key gauges of consumer spending, and are carefully tracked by the markets. Both indicators were weak in April. Core Retail Sales dropped to 0.0%, well off the estimate of 0.6%. Retail Sales followed suit, with a paltry gain of just 0.1%, compared to an estimate of 0.5%. The weak numbers could weigh on the US dollar, which has coughed up about 100 points to the Aussie in less than a week.

Canadian employment numbers were weak in April, as Employment Change came in at -28.9 thousand, a four-month low. This was nowhere near the market estimate of 12.8 thousand. The unemployment rate remained unchanged at 6.9%, matching the forecast. In the US, JOLTS Jobs Openings also was a disappointment, slipping to 4.01 million, well off the estimate of 4.21 million. However, the US employment picture remains positive, thanks to strong releases from Nonfarm Payrolls and Unemployment Claims.

There were no surprises from Federal Reserve Chair Janet Yellen last week, who gave a cautious thumbs-up to the economic recovery in testimony before Congress. Yellen said that the US economy has improved, but noted two sore spots - the employment market and inflation which remains below the Fed's target of 2%. Yellen stated that she therefore expects that low interest rate levels will continue to stay low for a "considerable time". Yellen has stated previously that slack remains in the economy, and the Fed is expected to proceed carefully with future tapers to its QE scheme. Since December, the Fed has trimmed the asset-purchase program by almost half, cutting it to $45 billion each month.

USD/CAD for Tuesday, May 13, 2014

Forex Rate Graph 21/1/13

USD/CAD May 13 at 14:45 GMT

USD/CAD 1.0896 H: 1.0926 L: 1.0887

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0706 1.0775 1.0852 1.0906 1.10 1.1094
Click to enlarge
  • USD/CAD is showing little movement on Tuesday, continuing the pattern we saw a day earlier.
  • On the downside, 1.0852 is providing support. There is stronger support line at 1.0775.
  • 1.0906 is a weak resistance line and has saw action earlier in the day. This is followed by the key line of 1.10.
  • Current range: 1.0852 to 1.0906

Further levels in both directions:

  • Below: 1.0852, 1.0775, 1.0706, 1.0678
  • Above: 1.0906, 1.10, 1.1094, 1.1177 and 1.1319

OANDA's Open Positions Ratio

USD/CAD ratio is almost unchanged in Tuesday trading. This is reflected in the movement of the pair, as the Canadian dollar is not showing much movement. The ratio has a majority of long positions, indicative of a trader bias in favor of the US dollar moving to higher ground.

The pair continues to trade quietly close to the 1.09 line. In the North American session, the Canadian dollar is steady.

USD/CAD Fundamentals

  • 11:30 US NFIB Small Business Index. Estimate 94.6 points. Actual 95.2 points.
  • 12:30 US Core Retail Sales. Estimate 0.6%. Actual 0.0%.
  • 12:30 US Retail Sales. Estimate 0.5%. Actual 0.1%.
  • 12:30 US Import Prices. Estimate +0.4%. Actual -0.4%.
  • 14:00 US Business Inventories. Estimate 0.4%. Actual 0.4%.
  • 14:30 Bank of Canada Review.

*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.