USD/CAD

USD/CAD has edged higher in Tuesday trading, as the pair trades slightly above the 1.06 line in the North American session. The Canadian dollar couldn’t take advantage of a sharp Manufacturing Sales release, which posted a gain of 1.0%. Over in the US, Core CPI showed a modest gain of 0.2% gain, while CPI came in at a flat 0.0%.

There was positive news from the Canadian manufacturing sector, as Manufacturing Sales, a key event, gained 1.0% in November. The markets were braced for a decline of 0.2%, so the strong reading came as a surprise. However, the good news failed to give a boost to the Canadian dollar, which has been struggling.

Over in the US, inflation indicators continue to point to very low inflation. Core CPI posted a gain of 0.2%, which edged above the estimate of 0.1%. The key index has not posted a gain above 0.3% in all of 2013. CPI was also weak, posting a reading of 0.0%, shy of the estimate of 0.1%.

The markets are keeping a close watch on the US Federal Reserve, which meets for a two-day policy meeting starting on Tuesday. The million dollar question is whether the Fed will announce a QE taper. Although there’s a stronger likelihood that the Fed will wait until after the new year, Bernard Bernanke’s swan song could surprise the markets if the Fed does take QE action this week. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper will likely boost the US dollar against the major currencies.

There was some good news on the fiscal front, as the US House of Representatives easily passed a budget deal on Thursday. The agreement, which will be voted on by the Senate next week, will remove the risk of a government shutdown and reduces the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty we’ve seen in recent months.

USD/CAD for Tuesday, December 17, 2013

USD/CAD December 17 at 15:40 GMT

USD/CAD 1.0611 H: 1.0617 L: 1.0576

USD/CAD Technical

• USD/CAD has edged higher in Tuesday trading. The pair crossed above the 1.06 line early in the North American session as the Canadian dollar remains under pressure.
• On the upside, 1.0652 is providing resistance. This is followed by a resistance line at 1.0783, which has remained intact since November 2009.
• 1.0573 continues to provide support. This is a weak line which could face pressure if the US dollar retracts. This is followed by support at 1.0502, which is protecting the 1.05 line.
• Current range: 1.0573 to 1.0652

Further levels in both directions:

• Below: 1.0573, 1.0502, 1.0442 and 1.0337
• Above 1.0652, 1.0783, 1.0852, 1.0945 and 1.10

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions in Tuesday trading, continuing the trend we’ve seen since the start of the week. This is reflected in the current movement of the pair, which has posted modest gains. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar reversing directions and moving higher.

The pair is trading just above the 1.06 level in Tuesday trading. With the Canadian dollar under pressure early in the North American session, we could see USD/CAD continue to post gains during the day.

USD/CAD Fundamentals

• 13:30 Canadian Manufacturing Sales. Estimate -0.2%. Actual 1.0%.
• 13:30 US Core CPI. Estimate 0.1%. Actual 0.2%.
• 13:30 US CPI. Estimate 0.1%. Actual 0.0%.
• 13:30 US Current Account. Estimate -101B. Actual -95B.
• 15:00 US NAHB Housing Market Index. Estimate 55 points. Actual 58 points.

*Key releases are highlighted in bold

*All release times are GMT