USD/CAD – Rangebound Despite Postive Canadian GDP Data

 USD/CAD is showing little change in Friday trading, as the pair continues to hover in the mid-1.01 range. The Canadian dollar failed to take advantage of a positive Canadian GDP reading as well as weak US numbers on Thursday. Today’s highlight is US UoM Consumer Sentiment. The markets are closed in Canada for a holiday.

Canadian numbers were headed in the right direction as indicated by Thursday’s releases. GDP, one of the most important economic indicators, rebounded from February’s negative reading, and climbed 0.2%. This modest gain beat the estimate of 0.1%. Inflation data also looked good. RMPI came in at 2.2%, beating the estimate of 1.9%. IPPI gained 1.4%, well above the forecast of 0.6%. The Canadian dollar did not respond to the positive data, as USD/CAD continues to trade in a narrow range.

There has been a lot of talk of the US recovery gaining traction, but this week has been a bust, as economic releases pointed to weakness in a wide range of sectors in the US economy. There were two major housing releases this week, and hopes of strong numbers were dashed. New Home Sales fell sharply from 437 thousand to 411 thousand, well below expectations. Pending Home Sales, also looked weak, declining 0.4%. The forecast stood at -0.3%. Unemployment Claims have looked sharp over the past four weeks, but slumped this time around, coming in at 357 thousand, well above the estimate of 340 thousand. Final GDP fell from 3.1% in February to just 0.4% in March, missing the forecast of 0.5%. Earlier in the week, manufacturing and consumer confidence also missed their estimates. Put simply, this has been a week has been one that the markets will be happy to forget. 

The Cyprus bailout crisis, which has spooked markets across the globe, appears to have receded. There was calm as country’s banks reopened on Thursday, after being closed for the past two weeks. Fearing a bank run, the government has imposed strict capital controls, including limiting withdrawals to 300 euros a day, and a ban on cashing checks. Under the EUR10 billion bailout agreement, all bank deposits under 100,000 euros will continue to be insured. As well, under the agreement, Deposits above this amount will be taxed, but details have not been released. Laiki, one of the country’s biggest banks, will be shut down. The original bailout agreement provided for a tax on all Cypriot bank deposits, and this had fueled fears that bank deposits could be taxed or seized in any EU country. Although this tax grab was quickly shelved after a huge outcry in Cyprus, the damage to investor confidence will certainly take time to repair.

USD/CAD for Friday, March 29, 2013

1.0168 H: 1.0174 L: 1.0157

USD/CAD Technical

USD/CAD continues to drift comfortably in the mid-1.01 range, as the proximate support and resistance levels remain intact(S1 and R1 above). There is weak support at 1.0157. We could see this line tested, if the Canadian dollar can muster any momentum. There is stronger support at 1.01. On the upside, there is resistance at 1.0229. This is followed by the resistance line of 1.0282.

• Current range: 1.0157 to 1.0229

Further levels in both directions:

• Below: 1.0157, 1.01, 1.0041 and 1.00
• Above: 1.0229, 1.0282, 1.0361, 1.0446 and 1.0523

OANDA’s Open Position Ratios

USD/CAD ratio remains unchanged in Friday trading. This is consistent with the lack of movement we are seeing from USD/CAD, which continues to be rangebound. Long positions make up a solid majority of the ratio, indicative of a bias towards the US dollar making gains at the expense of the Canadian currency.

Although USD/CAD has been subdued over the past few days, the pair has dropped about 150 points since the first week in March, dropping from above the 1.03 line. With no Canadian economic releases scheduled until next Friday, we could see the pair continue to trade and tread quietly.

USD/CAD Fundamentals

• 12:30 US Core PCE Price Index. Estimate 0.1%
• 12:30 US Personal Spending. Estimate 0.6%
• 12:30 US Personal Income. Estimate 1.0%
• 13:55 US Revised UoM Consumer Sentiment. Estimate 73.2 points
• 13:55 US Revised UoM Inflation Expectations

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.