USD/CAD – Loonie Edges Higher As Foreign Securities Purchases Jumps

The Canadian dollar has started the week in the right direction, posting slight gains on Monday. Early in the North American session, USD/CAD is trading in the low-1.04 range. In economic news, Canadian Foreign Securities Purchases improved sharply in October, hitting a five-month high. In the US, NAHB Housing Market Index dropped slightly and missed the estimate.

Canadian Foreign Securities Purchases looked sharp in October, coming in at C$8.36 billion, bouncing back nicely from the previous release of C$2.08 billion. The easily beat the estimate of C$6.71 billion. The indicator is closely linked to currency demand, since foreigners need to purchase Canadian dollars in order to buy domestic securities. So, a stronger indicator is good news for the Canadian dollar.

Unemployment Claims have been fairly steady over the past few weeks, but with speculation increasing about a possible December taper by the Federal Reserve, every employment release is under the market’s microscope. On Thursday, the key indicator showed little change with a reading of 339 thousand, but this was above the estimate of 331 thousand. There wasn’t any relief from Thursday’s other key release, Trade Balance. The October deficit widened to -$41.8 billion, compared to -$38.8 billion in September. This was well above the estimate of -$38.7 billion.

Late last week, Federal Reserve chair-elect Janet Yellen testified before the powerful Senate Banking Committee. Yellen has been an ardent supporter of QE, and told the committee that the present level of asset purchases should continue until growth improves and unemployment falls. She said that the labor market and economy are performing “far short of their potential”, but added that she expects inflation to remain below the Fed’s target of 2%. Yellen, who is slated to become the first woman to head the Federal Reserve, will take over from Bernard Bernanke in January.

USD/CAD for Monday, November 18, 2013

USD/CAD November 18 at 15:20 GMT

USD/CAD 1.0432 H: 1.0442 L: 1.0415

USD/CAD Technical

• USD/CAD has posted modest losses in Monday trading. The pair touched a low of 1.0415 early in the North American session.
• On the upside, the pair is facing resistance at 1.0502. This is followed by resistance at 1.0573.
• 1.0442 is providing support. This line is not strong and could face pressure if the Canadian dollar posts more gains. This is followed by a strong support level at 1.0337.
• Current range: 1.0442 to 1.0502

Further levels in both directions:

• Below: 1.0442, 1.0337, 1.0282, 1.0224 and 1.0158
• Above 1.0502, 1.0573, 1.0652 and 1.0837 and 1.0945

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions in Monday trading. This is not reflected in the current movement of the pair, as the Canadian dollar has posted gains. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar continuing to move to higher ground.

The Canadian dollar is putting pressure on the US dollar in Monday trading. Will the loonie continue to improve? With no major releases out of the US today, the pair’s movement in the North American session could be limited in scope.

USD/CAD Fundamentals

• 6:00 FOMC Member Eric Rosengren Speaks.
• 13:30 Canadian Foreign Securities Purchases. Estimate 6.71B. Actual 8.36B.
• 14:00 US TIC Long-Term Purchases. Estimate 21.3B.
• 15:00 US NAHB Housing Market Index. Estimate 56 points.
• 17:15 FOMC Member William Dudley Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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