US Dollar Looks Set For another Bearish Wave

US Dollar Looks Set For another Bearish Wave

By: Oliver Miller | Where To Trade | On:16-10-2014 13:13
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Key Highlights

  • US initial jobless claims declined from the previous reading of 287K to 264K, whereas the market was expecting it to rise by 3K.  
  • US continuing jobless claims increased to 2389K from 2382K, whereas the market was expecting it to decline by 2K.
  • US industrial production gained by 1% in September 2014, compared to the last time decline of 0.1%.
  • US Capacity Utilization released by the Federal Reserve Board jumped 79.3%, compared to the expectation of 79.0%.
  • Canadian Manufacturing sales decreased by 3.3%, compared to the last time rise of 2.9%.
  • EURUSD pair somehow managed to find support around the 1.2700 area which might act as a pivot area moving ahead.

 

Canadian Manufacturing Sales

About an hour ago, the Canadian manufacturing sales data was released by the Statistics Canada. The market as expecting the Canadian manufacturing sales to register a decline of 1.6% in August 2014, compared to the last time gain of 2.5% (unrevised). However, the outcome was disappointing, as the Canadian manufacturing sales declined by 3.3% in August 2014 to $52.1 billion. The most important point to note from the report was that this was the first decline in 2014. Moreover, the previous reading was also revised up from 2.5% to 2.9%. So, the net decline was even more than expected.

 

Where To Trade - Canadian MS - 16-10-2014

 

The report highlighted that about half of the decrease was caused by lower sales of motor vehicles and motor vehicle parts. If we exclude motor vehicles and parts, then the decline was about 1.9%. If we look into the transportation equipment sales, then it fell 12.8% to $8.9 billion in August 2014.

The Canadian dollar was seen trading lower after the release. However, the impact was not that high, but there was a momentum in favor of the Canadian dollar which was reversed to encourage the USDCAD pair buyers. As of writing, the USDCAD pair is trading around the 1.1330 level with immediate resistance ahead at 1.1350. A break above the same might take the pair towards the 1.1380 level.

 

Euro Area inflation Data

There was a critical economic release lined up during the London session in the Euro zone i.e. the Euro area consumer price index was published by Eurostat. The market was expecting the consumer price index in the Euro area to decline from 0.4% to 0.3% in September 2014, compared to the same month of the last year. The outcome was in line with the expectation, as the Euro area inflation was 0.3% in September 2014. However, the core consumer price index in the Euro area managed to register a better than expected inflation of 0.8%. The previous reading was also revised up to 0.9%.

The EURUSD pair moved lower earlier today, but managed to find buyers around the 1.2700 area. This particular level acted as a strong support for the pair, and helped it to rise again towards the 1.2750 level. There is a monster resistance at 1.2800 level, which must be broken for more gains moving ahead.

Oliver Miller

Oliver Miller

"Patience is the key for success"

Oliver Miller is one of the best financial analyst with 18 years of online trading experience

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