USD/CAD – Steady as US Shutdown Starts

USD/CAD is steady in Tuesday trading. Early in the North American session, the pair is trading slightly above the 1.03 line. The US government shutdown has started, as Congress was unable to reach an agreement over the budget. Today’s key release out of the US is ISM Manufacturing PMI. Canada has just one release today – a speech by BOC Senior Deputy Governor Tiff Macklem at an event in Toronto.

With Congress failing to reach an agreement on the budget before October 1, the US government has begun to shut down non-essential services. This last happened in 1996, and politicians on both sides of the divide will be trying to hammer out a compromise to end the crisis. Both sides seem entrenched in their positions. Republicans want to defund Obamacare before they approve a budget, and the Democrats are determined to protect their health care bill. If things are resolved sometime this week, it will have been more of a nuisance than a crisis. However, a much more serious crisis could occur in two weeks if Congress doesn’t reach an agreement on raising the debt ceiling. If that happens, the Treasury would be unable to pay all of its bills, and the economic fallout could be tremendous.

Canadian GDP, released every month, looked sharp in August. The key indicator posted a healthy 0.6% gain, bouncing back from a disappointing decline of -0.5% in July. The strong gain matched the forecast, and has given the Canadian dollar a slight lift in Monday trading. Canada also released inflation data on Monday and the numbers indicate that inflation remains subdued. Raw Materials Price Index posted a gain of 0.9%, well off the estimate of 3.2%. The Industrial Product Price Index followed suit, posting a modest gain of 0.2%. The estimate stood at 0.9%.

USD/CAD for Tuesday, October 1, 2013

USD/CAD 1.0314 H: 1.0330 L: 1.0288

USD/CAD Technical

• USD/CAD is showing little movement on Tuesday, as it trades close to the 1.03 line.
• The pair continues to face resistance at 1.0337. This is followed by a strong resistance line at 1.0442.
• The pair is receiving support at 1.0282. This line could face more pressure if the Canadian dollar improves. This is followed by a stronger support line at 1.0224.
• Current range: 1.0282 to 1.0337

Further levels in both directions:

• Below: 1.0282, 1.0224, 1.0158 and 1.0068
• Above 1.0337, 1.0442, 1.0502, 1.0573, 1.0652 and 1.0758

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in Tuesday trading. This is reflected in the current movement of the pair, which is showing little movement. The ratio is made up of a majority of long positions, indicative of a trader bias towards the US dollar moving higher.

USD/CAD is trading quietly, close to the 1.03 line. We could see continued movement from the pair during the day if there is no progress in the US budget crisis. As well, the US releases a key PMI later today, which could affect the direction of the pair.

USD/CAD Fundamentals

• 15:55 BOC Senior Deputy Governor Tiff Macklem Speaks at the Economic Club in Toronto.
• 13:00 US Final Manufacturing PMI. Estimate 52.8 points.
• 14:00 US ISM Manufacturing PMI. Estimate 55.3 points.
• 14:00 US ISM Manufacturing Prices. Estimate 55.2 points.
• 15:55 BOC Senior Deputy Governor Tiff Macklem Speaks at the Economic Club in Toronto.
• All Day – US Total Vehicle Sales. Estimate 16.1M.

*Key releases are highlighted in bold

*All release times are GMT

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