USD/CAD – Higher After Weak Canadian Retail Sales

USD/CAD is stable on Tuesday, as the pair trades in the mid-1.10 range in the North American session. On the release front, Canadian retail sales tumbled in August, as Core Retail Sales and Retail Sales both posted declines. In the US, HPI slipped to 0.1%, while the Richmond Manufacturing Index posted an excellent reading of 14 points, marking a 13-month high.

It was a poor start for Canadian numbers this week as retail numbers were dismal in August. Core Retail Sales slipped by 0.6%, the indicator’s first decline since January. The estimate stood at -0.1%. Retail Sales also softened, posting a decline of -0.1%. The markets had anticipated a gain of 0.4%. The weak figures point to decreasing spending by Canadian consumers, which does not bode well for the Canadian economy, as consumer spending is a critical engine for economic growth.

US Existing Home Sales didn’t impress, slipping to 5.05 million, compared to 5.15 million in the previous release. This was way off the estimate of 5.21 million. The indicator had exceeded the estimate in the past three releases, so the weak numbers disappointed the markets. We’ll get a look at New Home Sales on Wednesday.

The US economy may be much more robust than that of the Eurozone, but it is also grappling with weak inflation levels. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation levels could delay the Federal Reserve’s plan to raise interest rates, which is widely expected to take place in the first half of 2015.

USD/CAD for Tuesday, September 23, 2014

USD/CAD September 23 at 14:50 GMT

USD/CAD 1.1043 H: 1.1050 L: 1.0986

USD/CAD Technical

• USD/CAD edged lower in the Asian session. The pair dropped further in the European session, breaking below support at 1.1004. USD/CAD then reversed directions and continues to move higher in North American trade.
• 1.1124 is a strong resistance line.
• 1.1004 was breached but recovered and continues to provide support. 1.0961 is stronger.
• Current range: 1.1004 to 1.1124

Further levels in both directions:

• Below: 1.1004, 1.0961, 1.0852, 1.0775, and 1.0678
• Above: 1.1124, 1.1278, 1.1414 and 1.1493

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Tuesday, continuing the direction seen a day earlier. This is not consistent with the movement of the pair, as the Canadian dollar has posted slight losses. The ratio has a majority of long positions, indicating trader bias towards the US dollar continuing to post gains.

USD/CAD Fundamentals

• 13:00 US HPI. Estimate 0.4%. Actual 0.1%.
• 13:20 US FOMC Member Jerome Powell Speaks.
• 13:45 US Flash Manufacturing PMI. Estimate 58.1 points. Actual 57.9 points.
• 13:59 US Richmond Manufacturing Index. Estimate 10 points. Actual 14 points.
• 18:00 US FOMC Member Narayana Kocherlakota Speaks.

* Key releases are in highlighted bold.

*All release times are GMT

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