USD/CAD – Greenback Settles Down After Strong Gains

USD/CAD is showing little movement on Thursday, following strong gains a day earlier which saw the pair move back into 1.10 territory. Early in the North American session, the pair is trading in the high-1.10 range. In economic news, In the US, Unemployment Claims and Core CPI matched the forecast. We’ll get a look at the Philly Fed Manufacturing Index later in the day. There are no releases out of Canada on Thursday.

In the US, Unemployment Claims improved, dropping to 336 thousand. This was just shy of the estimate of 335 thousand. After some recent weak releases on the employment front, the markets will be pleased with this release. Meanwhile, inflation indicators continue to raise concerns, as Core CPI posted a paltry gain of 0.1% for the second straight month. Weak inflation levels are indicative of weak economic growth and could spell trouble for the US recovery.

According to the Federal Reserve minutes, which were released on Wednesday, we’re unlikely to see interest rates rise if unemployment drops to 6.5%. Previously, the Fed had said they would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also show that the Fed will likely continue trimming QE, barring any downturns in the economy.

In Canada, Wholesale Sales looked awful in January, posting a decline of 1.4%, well off the estimate of -0.5%. The indicator, which is an important gauge of consumer spending, has been weakening in recent months, and this is another indication that the Canadian consumer is being tight with the purse strings. We’ll get a look at Core Retail Sales, the most important consumer spending indicator, on Friday. The markets are expecting a weak gain of just 0.2%.

USD/CAD for Thursday, February 20, 2014

USD/CAD February 20 at 15:20 GMT

USD/CAD 1.1073 H: 1.1093 L: 1.1061

USD/CAD Technical

• USD/CAD is drifting in Thursday trade. The pair touched a high of 1.1093 in the European session but has edged lower.
• The key level of 1.1000 is providing support. This is followed by a support level at 1.0906, protecting the 1.09 line.
• 1.1094 is the next resistance line. This line was tested earlier in the day and could see further activity during the day. This is followed by resistance at 1.1177.
• Current range: 1.1000 to 1.1094

Further levels in both directions:

• Below: 1.1000, 1.0906, 1.0852, 1.0783 and 1.0706
• Above: 1.1094, 1.1177, 1.1319 and 1.1496

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions in Thursday trading. This is not consistent with what we are seeing from the pair, which is showing little movement. The ratio has a slight majority of short positions, indicating trader bias towards the loonie moving to higher ground against the US dollar.

The US dollar jumped higher on Wednesday, but USD/CAD is listless in Thursday trading. The pair is steady in the North American session.

USD/CAD Fundamentals

• 13:30 US Core CPI. Estimate 0.1%. Actual 0.1%.
• 13:30 US Unemployment Claims. Estimate 335K. Actual 336K.
• 13:30 US CPI. Estimate 0.1%. Actual 0.1%.
• 14:00 US Flash Manufacturing PMI. Estimate 53.6 points. Actual 56.7 points.
• 15:00 Eurozone Consumer Confidence. Estimate -11 points.
• 15:00 US Philly Fed Manufacturing Index. Estimate 9.2 points.
• 15:00 US Flash Mortgage Delinquencies.
• 15:00 US CB Leading Index. Estimate 0.5%.
• 15:30 US Natural Gas Storage. Estimate -255B.
• 16:00 US Crude Oil Inventories. Estimate 2.1M.

*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.