USD/CAD – Steady as Markets Await Key Canadian, US Data

USD/CAD continues to show little movement, as the pair trades in the 0.9960 range. The markets were pleased with the Canadian Ivey PMI reading, which hit a four-month high. The markets will be hoping that Buildings Permits can bounce back from a dismal reading in January. Today’s key release is US Unemployment Claims. The markets will be hoping that the indicator gets back on track, after last week’s poor reading.

The Canadian Ivey PMI was up sharply, coming in at 58.9 points. This was way above the estimate of 53.7 points. The markets are hoping that the strong Canadian data continues on Friday, with the release of Employment Claims, the Unemployment Rate, and Trade Balance. In the US, Crude Oil Inventories came in at 2.6 million, just under the estimate of 2.7 million. The markets will be hoping the Unemployment Claims rebound, after a disappointing reading last week. We could see some increased movement from USD/CAD on Friday, as Canada release three key indicators- Employment Change, the Unemployment Rate and Trade Balance.

The markets are having a busy day, as the ECB and BOE announced their benchmark interest rates. There were no surprises as the ECB kept rates at 0.75%, while the BOE left the current rate level of 0.50% unchanged. The euro has lost ground against the dollar following remarks by ECB head Mario Draghi that a strong euro is hurting Eurozone growth. We could see the US dollar take advantage of negative market sentiment following Darghi’s remarks and post gains against other currencies, including the Canadian dollar. 

The United States is Canada’s most important trading partner, and as the saying goes, when the US sneezes, Canada gets a cold. Therefore, the mixed economic indicators that we continue to see out of the US is of great concern to Canada as well, and the lack of clarity in the markets as to the extent of the US recovery can have a major impact on the movement of USD/CAD. In the US, the most recent GDP release was a major disappointment, pointing to a contracting economy for the first time since 2009. Employment numbers have also cooled, and the US Unemployment Rate edged up to 7.9%. On the bright side, consumer sentiment and manufacturing data have been solid. With only a handful of key US releases this week, each one will find itself under the market microscope as the markets try to get a handle on the health of the US economy.

USD/CAD for Thursday, February 7, 2013

Forex Rate Graph Thursday, February 7, 2013

USD/CAD February 7 at 14:25 GMT

0.9964 H: 0.9969 L: 0.9933

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
0.9833 0.9898 0.9954 1.0003 1.0041 1.01

 

USD/CAD is showing little movement, as the pair continues to trade slightly below the parity line. The pair remains boxed in a narrow range, as the proximate support and resistance lines remain intact (S1 and R1 above). USD/CAD continues to face resistance just above parity, at 1.0003. This is a weak line, and could face pressure if the greenback is able to sustain any upward momentum. This is followed by resistance at 1.0041. On the downside, the pair continues to receive support at 0.9954. This line has been busy throughout the week, and this trend could continue. There is stronger support at 0.9898.

Current range: 99.54 to 1.0003.

Further levels in both directions:

  • Below: 0.9954, 0.9898, 0.9833, 0.9809 and 0.9767.
  • Above: 1.0003, 1.0041, 1.01, 1.0157, 1.0207, 1.0286, 1.0365 and 1.0443.

 

OANDA’s Open Position Ratios

The ratios have been showing strong movement today, and the USD/CAD ratio is no exception. There is a strong move towards short positions. This could be an indication that the Canadian dollar is headed for more gains against the greenback. Will the pair finally breakout after a very quiet week?

USD/CAD  pair continues to be marked by narrow range trading, within site of the parity line. We could see more action from the pair, as there are more key Canadian and US releases due before the weekend. Any unexpected readings in these releases could affect the direction of USD/CAD.

USD/CAD Fundamentals

  • 13:30 Canadian Building Permits. Estimate 4.3%.
  • 13:30 Canadian NHPI. Estimate 0.2%. 
  • 13:30 US Unemployment Claims. Estimate 361K.
  • 13:30 US Preliminary Non-Farm Productivity. Estimate -1.3%.
  • 14:30 US FOMC Member Jeremy Stein Speaks.
  • 15:30 US Natural Gas Storage. Estimate -135B.
  • 20:00 US Consumer Credit. Estimate 141.1B.

 

*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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.