USD/CAD – Loonie Retreats after Weak Canadian Numbers

USD/CAD continues to move upwards, as the pair trades in the mid-1.01 level. These are the highest levels the pair has reached since July 2012. Tuesday’s Canadian numbers were disappointing, as Foreign Securities Purchases and Wholesale Sales were well below expectations. On Wednesday, US releases continue to paint a mixed picture, as Building Permits and PPI were within their estimates. However, US Housing Starts failed to meet the estimate. There are no Canadian releases scheduled on Wednesday.  

Analysts have been saying that the Canadian economy is in trouble, and the weak figures on Tuesday likely confirmed this view. Foreign Security Purchases declined by -1.92 billion dollars, the first drop since August 2012.  The markets had anticipated a gain of 7.21 billion. Wholesale Sales also took a hit, declining by 0.9%. This was much worse than the forecast of a 0.4% drop. In the US, Building Permits rose slightly to 0.93 million, just above the forecast of 0.92 million. At the same time, Housing Starts dropped to 0.89 million, missing the estimate of 0.93 million. US PPI rose 0.2%, just short of the forecast of 0.3%. The markets are waiting for another key US release, as the Federal Reserve releases its FOMC minutes later today.

Recent volatility in currency exchange rates has been making the news, and at its meeting in Moscow, the G-20 addressed this issue. However, the gathering of finance ministers and central bankers of the world’s leading economies took pains not to ruffle any feathers. In its final statement, the G-20 reaffirmed its commitment not to target exchange rates for “competitive purposes”, and to move more rapidly to market-determined exchange rate systems. The G-20 statement did not make reference to Japan, which has come under heavy criticism from its trading partners as they watch the yen hurtle downwards. We can expect the Japanese government to continue to implement its monetary policy, which will likely push the Japanese currency lower.

USD/CAD for Wednesday, Feb 20, 2013

USD/CAD Feb 20 at 15:50 GMT

1.0154 H: 1.0172 L: 1.0100

USD/CAD continues to show upward momentum, as the pair trades in the mid-1.01 range.  The pair is testing resistance at 1.0157, and has briefly broke above this line earlier. This is followed by 1.0229, which is a strong resistance line, having held firm since last July. On the downside, 1.0041 is protecting the important parity level. This line has strengthened as the pair trades at higher levels. 

Current range: 1.01 to 1.0157.

Further levels in both directions:

• Below: 1.01, 1.0041, 1.00, 0.9954, 99.03 and 98.60.
• Above: 1.0157, 1.0229, 1.0302 and 1.0446.

OANDA’s Open Position Ratios

The USD/CAD ratio has been quiet, although the same cannot be said about the currency pair, as the US dollar makes slow but steady progress against the loonie. If this upward trend continues, we can expect the ratio to display some movement as well. 

The Canadian dollar has shed about 150 points against the US dollar since Friday. Will the greenback rally continue? We could be in for more volatility from the pair, with the US releasing key employment, manufacturing and housing numbers on Thursday.

USD/CAD Fundamentals

• 13:30 US Building Permits. Estimate. 0.92M. Actual 0.93M.
• 13:30 US PPI. Estimate 0.3%. Actual 0.2%.
• 13:30 US Core CPI. Estimate 0.2%. Actual 0.2%.
• 13:30 US Housing Starts. Estimate 0.93M. Actual 0.89M.
• 19:00 US FOMC Meeting Minutes.

*Key releases are highlighted in bold

*All release times are GMT

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