USD/CAD – Canadian Dollar Rally Continues

The Canadian dollar continues to post gains on Tuesday. In the North American session, USD/CAD is trading slightly below the 1.25 line in the North American session. After a horrendous January, the Canadian dollar has changed directions, gaining over 200 points this week. On the release front, Canadian RMPI and IPPI both posted declines. In the US, Factory Orders posted a sharp decline of 3.4%.

Canadian inflation numbers were a disappointment in December. RMPI plunged 7.6%, but this was enough to beat the forecast of -8.8%. IPPI followed suit with a reading of -1.6%, lower than the estimate of -0.5%. In the US, Factory Orders posted a sharp decline of 3.4%, compared to the estimate of -1.8%. This marked a 4-month low for the manufacturing indicator.

On Friday, US Advance GDP for Q4 disappointed, posting a gain of 2.6%. The markets had anticipated a gain of 3.0%. Still, market sentiment towards the US economy remains positive, underscored by the Federal Reserve statement last week, where the Fed noted solid growth in the economy. The Fed remains on track to raise rates later in 2015, and the US dollar will likely benefit as speculation continues over the timing of a rate hike.

USD/CAD for Tuesday, February 3, 2015

USD/CAD February 3 at 15:45 GMT

USD/CAD 1.2487 H: 1.2644 L: 1.2486

USD/CAD Technical

• USD/CAD was uneventful in the Asian and European sessions. The pair has posted losses in the North American session, breaking below support at 1.2543.
• On the upside, 1.2543 is an immediate line.
• 1.2469 has weakened in support as the pair trades at lower levels. Will the pair break below this level? 1.2387 is stronger.
• Current range: 1.2469 to 1.2543

Further levels in both directions:

• Below: 1.2469, 1.2387, 1.2261 and 1.2190
• Above: 1.2543, 1.2680, 1.2761, 1.2950 and 1.3063

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Tuesday. This is consistent with the pair’s movement, as the Canadian dollar continues to post strong gains. The ratio is close to an even split between long and short positions, indicative of a lack of trader bias as to what direction the pair will take next.

USD/CAD Fundamentals

• 13:30 Canadian Raw Materials Price Index. Estimate -8.8%. Actual -7.6%.
• 13:30 Canadian Industrial Product Price Index. Estimate -0.5%. Actual -1.6%.
• 15:00 US Factory Orders. Estimate -1.8%. Actual -3.4%.
• All Day – US Total Vehicle Sales. Estimate 17.0M.

*Key releases are highlighted in bold

*All release times are GMT

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