USD/CAD – Modest Gains As US Posts Mixed Numbers

USD/CAD has edged higher on Tuesday, as the pair trades in the mid-1.05 range. There was mixed news out of the US, as Building Permits looked sharp, breaking above the 1 million mark. However, Consumer Confidence was a disappointment, slipping to a seven-month low. There are no Canadian releases on Tuesday.

The week did not start well, as US Pending Home Sales posted its fifth straight decline in October. However, the tune was markedly different on Tuesday, as Building Permits pushed over the 1 million mark, hitting 1.03 million units. This was the highest level since June 2008 and beat the estimate of 0.94 million. The September release, which had been postponed due to the government shutdown last month, came in at 0.97 million, above the estimate of 0.94 million. These strong releases were tempered by a weak CB Consumer Confidence release, as the key indicator dropped to 70.2 points, its lowest level since March. The markets had expected better, with the estimate standing at 72.2 points.

Canada released inflation and retail sales numbers on Friday, and the mixed numbers didn’t prevent the Canadian dollar from losing more ground against the US currency. Core CPI posted a small gain of 0.2% for the third straight month, while CPI disappointed with a decline of 0.2%. Core Retail Sales posted a flat figure of 0.0%, a three-month low. There was better news from Retail Sales, which jumped 1.0%, its best showing in four months. This easily beat the estimate of 0.3%. If we don’t see stronger releases out of Canada, the loonie will have a tough time keeping pace with the strong US dollar.

Low inflation indicators have been a major concern in Japan and the Eurozone, and the US economy is not immune from this problem. The Producer Price Index continues to look weak, posting a decline of 0.2% in October. This was the index’s second straight decline. Core CPI showed a weak gain of 0.1%, and CPI dipped to -0.1%. These weak numbers have raised concern about the health of the US economy.

USD/CAD for Tuesday, November 26, 2013

USD/CAD November 26 at 15:15 GMT

USD/CAD 1.0556 H: 1.0558 L: 1.0521

USD/CAD Technical

• USD/CAD has edged higher in Tuesday trading, as the Canadian dollar remains under pressure.
• On the upside, the pair continues to face resistance at 1.0573. This line has weakened and could  be tested during the North American session. This is followed by a resistance line at 1.0652, which has held firm since October 2011.
• The pair continues to receive support at 1.0502. This is followed by a support line at 1.0442, which has been busy throughout November.
• Current range: 1.0502 to 1.0573

Further levels in both directions:

• Below: 1.0502, 1.0442, 1.0337, 1.0282, 1.0224 and 1.0158
• Above 1.0573, 1.0652 and 1.0837 and 1.0945

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed positions in Tuesday trading and is pointing to gains in long positions in Tuesday trading. This is reflected in the current movement of the pair, as the US dollar has posted slight gains against the Canadian currency. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar reversing its current slide and moving to higher ground.

The Canadian dollar remains under pressure in Tuesday trading, as the pair trades in the mid-1.05 range. We are unlikely to see substantial movement from the pair during the North American session.

USD/CAD Fundamentals

• 13:30 US Building Permits. Estimate 0.94M. Actual 1.03M.
• 13:30  September Data – US Building Permits. Estimate 0.94M. Actual 0.97M.
• 14:00 US S&P/CS Composite-20 HPI. Estimate 13.0%. Actual 13.3%.
• 14:00 US HPI. Estimate 0.5%. Actual 0.3%.
• 15:00 US CB Consumer Confidence. Estimate 72.2 points. Actual 70.4 points.
• 15:00 US Richmond Manufacturing Index. Estimate 3 points. Actual 13 points.

*Key releases are highlighted in bold

*All release times are GMT

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