USD/CAD – Greenback Posts More Gains Against Loonie

USD/CAD continues to edge higher, as the pair is now trading above the 1.01 line. The US dollar has been making slow but steady progress against the loonie this week, and has now gained about a cent against the loonie since Friday. This marks the highest level that USD/CAD has reached since July 2012. The US markets are back in action after a holiday on Monday, with one US release on schedule, NAHB Housing Market Index. In Canada, there are two releases later today – Foreign Securities Purchases and Wholsale Sales.

The IMF issued its annual report card for Canada late last week, and stated that there was further room for interest rate cuts. The well-respected institution noted that the Canadian economy slowed in 2012, and growth will improve in 2013, but at modest clip of 1.8%. However, it expected GDP to rise in 2014, with exports increasing due to further demand from the US. The IMF also found that the Canadian dollar was overvalued between 5%-15%, and had been bolstered by high commodity prices and the country’s safe-haven status.

G-20 finance ministers and central bankers concluded a two-day meeting on the weekend in Moscow, and the issue of exchange rates was on the agenda. In their final statement, the participants pledged not to “target our 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 fire for monetary policies which have led to free-fall in the value of the Japanese yen. G-20 leaders appear resigned to the yen continuing to slide, but do not want Japanese officials to make public statements which will pull down the currency. Thus, Japan’s major trading partners, although not pleased about the tumbling yen, have tacitly given Japan a green light to continue to stimulate its economy with further monetary easing measures and higher inflation, which will likely have a negative impact on the yen.

USD/CAD for Tuesday, Feb 19, 2013

USD/CAD February 19 at 13:15 GMT

1.0115 H: 1.0130 L: 1.0103

USD/CAD Technical 

USD/CAD continues to post modest gains, as it trades slightly above the 1.01 line. The pair faces resistance at 1.0157, and this line could see some activity if the US dollar continues to push higher. The pair is receiving weak support at 1.01. The next support level is at 1.0041. 

• 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: 1.01, 1.0157, 1.0286, 1.0302 and 1.0446.

OANDA’s Open Position Ratios

The USD/CAD ratio is showing movement towards long positions. This is reflected in the movement of the currency pair, as the US dollar posts modest gains against its Canadian counterpart. If the present movement in the ratio continues, we could see the US dollar make further gains. 

The US dollar continues to push higher, and has crossed the 1.01 line, which proved to be stubborn resistance earlier in February. With some major releases due out of the US later this week, we could see increased volatility from USD/CAD.

USD/CAD Fundamentals

• 13:30 Canadian Wholesale Sales. Estimate -0.4%
• 13:30 Canadian Foreign Securities Purchases. Estimate 7.21B.
• 15:00 US NAHB Housing Market Index. Estimate 48 points.

*Key releases are highlighted in bold

*All release times are GMT

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