USD/CAD Little Movement as Eurogroup gives nod to Greek aid

USD/CAD continues to be rangebound in the European session, and the pair has been very quiet throughout this week. In yesterday’s Canadian releases, NHPI (New Housing Price Index) and Capacity Utilization Rate were both slightly above the estimate, while in the US, Unemployment Claims looked sharp, dropping to a nine-week low. However, the loonie shrugged off these releases, and USD/CAD showed very little movement on Thursday.

After months of uncertainty, the ongoing Greek debt saga appears to be moving in the right direction. Eurozone finance ministers finally agreed to release the second installment of bailout funds to Greece. At a meeting in Brussels on Thursday, the Eurogroup approved the release of the second installment of the Greek bailout, following the successful completion of the Greek government’s debt buyback scheme. The EFSF will release a total amount of EUR 49.1 billion, which will be paid out in several installments. Greece is scheduled to receive EUR 34.3 billion in the next few days, with the remaining funds to be delivered by March 2013. The buyback program and bailout package are critical milestones in getting the struggling country back on its financial feet. If all goes well, Greece’s debt to GDP ratio is expected to drop to 124 per cent by 2020.

There was more news out of Brussels, as the Eurogroup approved an agreement whereby the ECB will become the single supervisor for the 200 largest banks in the Eurozone. The move aims to achieve closer financial integration in the Eurozone and provide protection for the euro from future financial crises. Under the agreement, financial institutions finding themselves in trouble would be able to directly approach the ESM for funds, rather than go through their national governments. If all goes smoothly, the ECB should begin its role as “super bank commissioner” no later than January 2014.

Back in the US, the markets continue to absorb the news of further monetary easing by the Federal Reserve, in the form of QE4. Under this program, the Fed will purchase an additional $45 billion per month in Treasury holdings in order to boost the US economy. In economic news, the sole Canadian release is Manufacturing Production. In the US, today’s key release is US Core CPI.

USD/CAD for Friday, Dec 14, 2012

USD/CAD Dec 14 at 10:35 GMT
0.9844 H: 0.9833 L: 0.9851

S3 S2 S1 R1 R2 R3
0.9625 0.9767 0.9812 0.9909 1.00 1.0041

USD/CAD Technical
USD/CAD continues to trade in a narrow range, which has been the trend for this week. The pair is receiving support at 0.9812, with a stronger line at 0.9767. On the upside, there is resistance at 0.9909. With the pair boxed in a narrow range, this resistance line continues to hold firm.
• Current range: 0.9812 to 0.9909
Further levels in both directions:
• Below: 0.9812, 0.9767, 0.9625, 0.9526 and 0.9445.
• Above: 0.9909, 1.00, 1.0041, 1.0157 and 1.0252.

OANDA’s Open Position Ratios
USD/CAD bias remains strongly in favor of long positions. The pair has had a very quiet week, but the bias indicates that trader sentiment is positive towards the greenback. Following the loonie’s strong gains last week, there is room for the pair to move downwards, but the short positions remain significant, as traders wait to see if the pair will show any more significant movement before the end of the trading week.

Today’s Expectations
USD/CAD has had a very quiet week, despite the announcement of QE4 and strong employment numbers out of the US. With only one key release later on Friday, that being US Core CPI, we could see another quiet day from the pair.
USD/CAD Fundamentals
• 13:30 Canadian Manufacturing Sales. Estimate 0.0%.
• 13:30 US Core CPI. Estimate +0.2%.
• 13:30 US CPI. Estimate -0.2%.
• 14:00 US Flash Manufacturing PMI. Estimate 52.6 points.
• 14:15 US Capacity Utilization Rate. Estimate 77.9%.
• 14:15 US Industrial Production. Estimate +0.3%.

*Key releases are highlighted in bold
*All release times are GMT

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