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USD/CAD: Greenback Tests 1.03 As Canadian Inflation Disappoints

The US dollar edged higher on Friday against its Canadian counterpart, as the pair briefly dipped above the 1.03 level early in the North American session. The pair has not traded at these high levels since early March. USD/CAD moved higher following the release of weaker than expected inflation numbers out of Canada. US numbers have not impressed this week, and the trading week wraps up with the US UoM Consumer Sentiment later today.Canada released inflation data earlier on Friday, and the figures disappointed the markets. Core CPI, a key event, posted a weak gain of 0.1%, missing the estimate of 0.2%. CPI recorded its first decline since January, dropping by 0.2%. The estimate stood at 0.0%. These numbers point to weak activity in the Canadian economy, and could increase speculation about a rate cut by the Bank of Canada. US releases have looked unimpressive this past week, and Thursday’s events did not bring any relief. Core CPI posted a weak gain of 0.1%, missing the forecast of a 0.2% gain. Unemployment Claims had looked impressive in recent readings, but the key indicator slumped, as new claims jumped to 360 thousand, blowing past the estimate of 332 thousand. The Philly Fed Manufacturing Index dropped into negative territory, posting a reading of -5.2 points. The markets had expected a gain of 2.5 points. Housing Starts fell sharply, from 1.04 million to 0.85 million. This was well below the estimate of 0.98 million. There was some positive news, as Building Permits, which rose to 1.02 million, beating the estimate of 0.94 million. The disappointing numbers will again bring into question the health of the US economy, which has not been able to churn out continuous positive releases.The US dollar has enjoyed some broad strength against the major currencies of late, in part due to speculation that the Federal Reserve might terminate its current round of quantitative easing. On Thursday, John Williams, president of the Federal Reserve Bank of San Francisco, said that the Fed could begin reducing its quantitative easing program this summer and wind up bond buying late in 2013. As QE is dollar-negative, these remarks gave a boost to the US dollar. The markets will be all ears to what the Fed has to say, as comments about QE will likely have an impact on the currency markets.

USD_CAD

USD/CAD May 17 at 14:15 GMT1.0297 H: 1.0307 L: 1.0260

USD/CAD Technical” title=”USD/CAD Technical” width=”600″ height=”81″ />USD/CAD has moved higher, and is trading close to the 1.03 line. The pair is receiving support at 1.0282. This is a weak line, and could be tested if the Canadian dollar shows any improvement. There is a stronger line of support at 1.0229. On the upside, the pair is facing resistance at 1.0337. This is followed by a stronger line of resistance at 1.0442.

  • Current range: 1.0282 to 1.0337

Further levels in both directions:

  • Below: 1.0282, 1.0229, 1.0157, 1.01, 1.0041 and 1.00
  • Above: 1.0337, 1.0442, 1.0502 and 1.0658.

OANDA’s Open Positions RatioUSD/CAD ratio is pointing to strong movement towards short positions. This movement can be explained by the fact that as the US dollar pushes higher, more long positions are being covered and taken out of the ratio. As a result of this movement, a majority of the open positions are now short. If the pair continues to show activity, we can expect continuing movement from the ratio as well.The US dollar capitalized on some weak Canadian inflation numbers, and the pair is close to the 1.03 level. Will the pair’s upward trend continue?

USD/CAD Could Look For A Support At Trendline From 2012 Low

The Canadian dollar was one of the best performers last week, gaining strongly against the USD. We can see a sharp fall on the USD/CAD, back to the 1.0050 area, but still only into a third leg of decline from 1.0340, which is a structure of a contra-trend movements. Notice that the pair is still above the rising trendline from the 2012 low, and also above the 0.9930 critical level of wave X). With that said, it would be too soon to call end to a bullish period and look to a lower USD/CAD. We still see current pull-back as wave B) that is part of a complex double zig-zag in wave (E). An impulsive reversal higher next week, back to 1.0200 would suggest another leg higher, this time to 1.0440 trend-line resistance where we would be looking for an end to a corrective wave (E) of X triangle, as shown on the weekly chart. Only a sharp fall through 0.9930 would require a different outlook (ALT on the chart).

USDCAD

USD/CAD Edges Lower As US Data Disappoints

USD/CAD remains at high levels, but the US dollar has edged lower as key US numbers disappointed on Thursday. The pair has crossed below the 1.02 line and was trading in the high-1.01 range early in the North American session. In the US, Building Permits beat the estimate, but Core CPI was slightly below the forecast. Unemployment Claims was a major disappointment, climbing to a six-month high. Philly Fed Manufacturing Index also was well off expectations. In Canada, Manufacturing Sales, a key indicator, came in well below expectations. Foreign Securities Purchases also missed the estimate. Later on Thursday, the Bank of Canada will release its quarterly review.There was a host of key US releases on Thursday, and the news was mostly negative. Building Permits climbed nicely, up to 1.02 million. This beat the estimate of 0.94 million. However, that was it for the good news. Core CPI posted a weak gain of 0.1%, just shy of the estimate of a 0.2% gain. Unemployment Claims had reeled off three strong readings, but this time the key indicator jumped to 360 thousand, blowing past the estimate of 332 thousand. The Philly Fed Manufacturing Index dropped into negative territory, posting a reading of -5.2 points. This was well off the estimate of 2.5 points. In Canada, Manufacturing Sales was a major disappointment, as the indicator declined by 0.3%. The estimate stood at a gain of 0.6%. Foreign Securities Purchases was up sharply to $1.19 billion, but this still fell well short of the forecast of $5.36 billion.The US dollar has shown some broad strength against the major currencies, in part due to speculation that the Federal Reserve might terminate its current round of quantitative easing, thanks to an improving employment picture in the US. The Fed has not given any clues that it might scale back QE, which involves asset purchases of $85 billion every month. However, if the US recovery shows stronger signs of recovery, pressure will increase on the Fed to ease up on the QE, which would be dollar-positive. Any statements from the Fed regarding QE could affect the movement of USD/CAD.

USD_CAD

USD/CAD May 16 at 14:15 GMT1.0163 H: 1.0208 L: 1.0152

USD/CAD Technical” title=”USD/CAD Technical” width=”598″ height=”78″ />USD/CAD has edged below the 1.02 level. The pair is testing support at 1.0157. We could see this line fall if the Canadian dollar continues to show improvement. There is a stronger support level at the round number of 1.01. On the upside, the pair is facing resistance at 1.0229. This is followed by resistance at 1.0337.

  • Current range: 1.0157 to 1.0229

Further levels in both directions:

  • Below: 1.0157, 1.01, 1.0041, 1.00, 0.9930 and 98.42
  • Above: 1.0229, 1.0282, 1.0337 and 1.0442.

OANDA’s Open Positions RatioUSD/CAD ratio is not showing a lot of movement in Thursday trading. This is consistent with what we are seeing from the pair, which has moved slightly downwards. Traders should continue to monitor the ratio, as an increase in activity could be an early sign that the pair will show more volatility.USD/CAD has edged lower following some weak US numbers earlier. We can expect the pair to remain fairly steady as it trades in the mid-1.01 range.

USD/CAD Remains In Downtrend From 1.0293

USD/CAD remains in downtrend from 1.0293, the price action from 1.0051 is likely consolidation of this downtrend. Resistance is now located at the upper line of the price channel on the 4-hour chart. As long as the channel resistance holds, the downtrend could be expected to resume, and another fall towards 1.0000 is possible. On the upside, a clear break above the channel resistance will suggest that the downward movement from 1.0293 had completed at 1.0013 already, then further rally to 1.0200 area could be seen.

usdcad

USD/CAD Broke Above Channel Resistance

USD/CAD broke above the upper line of the price channel on 4-hour chart, suggesting that the downward movement from 1.0341 (March 1 high) had completed at 1.0013 already. Further rise to test 1.0341 resistance would likely be seen, a break above this level will indicate that the uptrend from 0.9632 (September 14, 2012 low) has resumed, then then next target would be at 1.0500 area. However, as long as 1.0341 resistance holds, the rise from 1.0013 would possibly be correction of the downtrend from 1.0341, one more fall towards 0.9500 is still possible after correction.

usdcad

USD/CAD Continues Lower On Bearish Momentum

USD/CAD daily chart” title=”USD/CAD daily chart” width=”1703″ height=”807″ />Bearish momentum in the USD/CAD continued once again yesterday, building on Monday’s negative start to the week for the pair, moving lower once again today, and now preparing to test parity in the short term. The key support level for the pair was breached last week, and then tested on Monday in the 1.0100 price region, and with this level now broken, is now adding further downward pressure.Moving to the volume indicators, yesterday’s trading volume was higher than that of Monday, rising in line with the wider spread candles, and with no evidence of any buying at this level, negative sentiment continues to weigh on the pair. The Canadian dollar is also receiving a boost from the recent bullish momentum in oil, which is now testing the $96 per barrel level on the WTI futures contract.On the left of the screen, the volume at price indicator clearly defines the support and resistance levels, and immediately below the current price action, potential support is thin, and the next real level is the 0.9950 area and below. If this is breached, then expect to see a deeper move develop in the medium term with a retest of the 0.9820 area of late last year now a possibility.

Canadian Consumer Prices Data Awaited

USD/CAD” title=”USD/CAD” width=”2306″ height=”1591″ />For the 24 hours to 23:00 GMT, the USD rose 0.29% against the CAD to close at 1.0187.In the Asian session, at GMT0300, the pair is trading at 1.0214, with the USD trading 0.27% higher from yesterday’s close.The pair is expected to find support at 1.0169, and a fall through could take it to the next support level of 1.0123. The pair is expected to find its first resistance at 1.0239, and a rise through could take it to the next resistance level of 1.0263.Canadian consumer price inflation data scheduled to be released later today is expected slowdown in the month of April.

Canadian Investors Anticipate BOC Interest Rate Decision

USD/CAD” title=”USD/CAD” width=”1560″ height=”799″ />For the 24 hours leading to 23:00 GMT, the USD rose 0.62% against the CAD to close at 1.0408, in the wake of strong US consumer and housing data.In the Asian session at GMT0300, the pair is trading at 1.0410, with the USD trading marginally higher from yesterday’s close.The pair is expected to find support at 1.0349, and a fall through could take it to the next support level of 1.0288. The pair is expected to find its first resistance at 1.0444, and a rise through could take it to the next resistance level of 1.0478.The Bank of Canada’s (BoC) interest rate decision is due later today.The central bank is expected to maintain its policy rate at 1.00%. Traders will also look at the bank’s statement for economy performance indications.

USD/CAD Pulls Back From 1.0312

The USD/CAD is pulling back from 1.0312, being contained by 1.0341 resistance. However, the fall is most likely a consolidation of the uptrend from 1.0013. One more rise to re-test 1.0341 resistance is possible. A break above this level will signal resumption of the longer term uptrend from 0.9632 (September 14, 2012 low), then the next target would be at the 1.0500 area. On the downside, as long as 1.0341 resistance holds, the rise from 1.0013 would possibly be a correction of the downtrend from 1.0341. Another fall towards 0.9500 is still possible after correction.

usdcad

USD/CAD Edges Higher As Markets Await Bernanke Remarks

USD/CAD has not shown a lot of activity so far this week, reflective of the fact that neither country has released any numbers for the markets to scrutinize. The only releases on Tuesday are speeches by US Treasury Secretary Jack Lew and two members of the FOMC. Both Canada and the US will release key data on Wednesday, and Fed chief Bernard Bernanke will testify before a Congressional Committee. In Canada, the sole release is a speech by Bank of Canada Governor Mark Carney to the Board of Trade in Montreal. USD/CAD has again moved higher, as the pair is trading in the high-1.02 level as we start the North American session. The loonie has struggled since hitting some turbulence on Friday, after Canada posted weak inflation numbers. Core CPI, a key event, posted a weak gain of 0.1%, missing the estimate of 0.2%. CPI recorded its first decline since January, dropping by 0.2%. The estimate stood at 0.0%. These are the weakest Canadian inflation numbers we’ve seen since October 2009. The Canadian dollar responded by dropping almost one cent on Friday, and finds itself struggling to stay in 1.02 territory. The Bank of Canada has talked about raising interest rates (which is bullish for the Canadian dollar), but will be hard-pressed to follow through, given these low inflation levels. The markets were treated to a host of US releases last week, and for the most part, the results disappointed. US Inflation and manufacturing numbers fell below expectations, and housing numbers were also weak. Unemployment Claims, one of the most important releases and often a market-mover, had looked impressive in recent readings. However, the key indicator couldn’t keep pace last week, as the number of new claims jumped to 360 thousand, much higher than the estimate of 332 thousand. There was some good news from Building Permits, which were up nicely. On Friday, there was some relief from UoM Consumer Sentiment which jumped from 72.3 points to 83.7 points. This was well above the estimate of 77.9 points, and points to a sharp increase in consumer confidence. However, the host of weak US numbers we saw last week will again bring into question the extent of the US recovery, which has not been able to demonstrate sustained growth and continuous positive releases. The Federal Reserve has not been in the spotlight recently, but that could change if the Fed modifies its current round of quantitative easing, which involves the purchase of $85 billion in assets each month. The Fed will be tempted to act if it feels that the US recovery has gained more traction, giving it some room to ease up on QE. Last week, John Williams, president of the Federal Reserve Bank of San Francisco, stated that the Fed could begin reducing QE this summer and terminate bond buying late in 2013. As the QE program is dollar negative, any moves by the Fed to wind up QE would be bullish for the dollar at the expense of the euro. So traders can expect any new developments (real or rumor) regarding QE to impact on the currency markets. We should get a better idea of where the Fed stands on Wednesday, when the minutes of the FOMC’s last policy meeting, and Fed chairman Bernard Bernanke testifies before Congress.

USD_CAD

USD/CAD May 21 at 13:20 GMTUSD/CAD 1.0286 H: 1.0286 L: 1.0243

USD/CAD Technical” title=”USD/CAD Technical” width=”598″ height=”81″ />USD/CAD continues to trade close to the 1.03 line. The pair is testing support at 1.0282, and this line could fall if the retreating Canadian dollar shows any improvement. There is a stronger support level at 1.0229. On the upside, the pair is facing resistance at 1.0337. This is followed by a stronger line of resistance at 1.0442. This line has held firm since June 2012.

  • Current range: 1.0282 to 1.0337

Further levels in both directions:

  • Below: 1.0282, 1.0229, 1.0157, 1.01, 1.0041 and 1.00
  • Above: 1.0337, 1.0442, 1.0502 and 1.0658.

OANDA’s Open Positions RatioUSD/CAD ratio is pointing towards long positions in the Tuesday session. This is not reflected in what we are currently seeing from the pair, as the US dollar has posts gains. We are still seeing a slight majority in favor of short positions, indicating that trader sentiment is slightly biased towards the pair reversing direction and the Canadian dollar improving.The US dollar continues to put pressure on the Canadian currency, as it once again tests the 1.03 level. There are no numbers coming out of Canada or the US on Tuesday, so we could see some drifting from the pair. Wednesday will likely see more movement, as both countries release major data. As well, the Federal Reserve will be in the spotlight, as Bernard Bernanke testifies on Capitol Hill and the Fed releases the minutes of its most recent policy meeting. USD/CAD Fundamentals

  • 14:00 US Treasury Secretary Jack Lew Speaks.
  • 15:30 US FOMC Member James Bullard Speaks.
  • 16:45 Bank of Canada Governor Mark Carney Speaks.
  • 17:00 US FOMC Member William Dudley Speaks.