USD/CAD – Unchanged after Sharp Canadian & US Numbers

USD/CAD has started the week treading softly, as the pair continues to trade in the mid-1.01 range in Monday trading. The Canadian dollar has enjoyed a solid June, gaining about two cents against its US counterpart. In economic news, the US ended the week on a sour note, as UoM Consumer Sentiment missed the estimate. There was better news on Monday as the Empire Manufacturing Index hit a three-month high. The sole Canadian release, Foreign Securities Purchases was sharp as well, climbing to its highest level in almost a year.

US manufacturing numbers have been mixed, and the Empire Manufacturing Index has been volatile, with sharp swings in both directions. This time, the index bounced back from a disappointing release in May of -1.4 points, and climbed to 7.8 points. This surprised the markets, which had expected a gain of just 0.4 points. In Canada, Foreign Securities Purchases was outstanding, climbing from $1.19 billion to $14.91 billion. This blew past the estimate of $4.59 billion.

The spotlight will soon shift to the US Federal Reserve, which will release a policy statement on Wednesday. What the Fed might do with QE has become a hot issue for the markets and there is growing speculation that the Fed could tighten QE in the near future. Currently the Fed purchases $85 billion in assets every month. The Fed has said that it won’t make a move until the US economy improves, so every strong US release seems to result in more speculation that the Fed will press the trigger. A tightening of QE is dollar positive, so any action or even hints from the Fed in this regard could boost the dollar.

USD/CAD for Monday, June 17, 2013

USD/CAD 1.0159 H: 1.0166 L: 1.0150

USD/CAD Technical

USD/CAD is rangebound as we begin the new trading week. USD/CAD is testing support at 1.57. This line continues to be busy, as the pair has not been able to break out from the mid-1.01 range. The next support level is at the round number of 1.01. On the upside, the pair continues to face resistance at 1.0229. This is followed by stronger resistance at 1.0282.

• Current range: 1.0157 to 1.0229

Further levels in both directions:

• Below: 1.0157, 1.01, 1.0058 and 1.00
• Above: 1.0229, 1.0282, 1.0337, 1.0442 and 1.0502

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged, continuing the trend which we saw late last week. This is reflected in the pair, which is showing little movement. The ratio continues to be split almost down the middle between long and short positions, indicating a lack of bias as to what direction the USD/CAD will take.

The Canadian dollar has gained around two cents in the month of June, and is at its highest level since mid-May. Can it continue to post gains? With no key releases until Tuesday, we could see a very subdued performance from USD/CAD on Monday.

USD/CAD Fundamentals

• 12:30 Canadian Foreign Securities Purchases. Estimate 4.59B. Actual 14.91B.
• 12:30 US Empire State Manufacturing Index. Estimate 0.4 points. Actual 7.8 points.
• 14:00 US NAHB Housing Market Index. Estimate 45 points.
• Day 1 of G8 Meetings.

*Key releases are highlighted in bold

*All release times are GMT

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