USD/CAD – Higher as US Posts Strong Data

The US dollar has posted gains against the Canadian currency on Thursday. The pair has pulled away from the 1.03 line and was trading in the mid -1.03 range in the North American session. The US dollar got a boost from strong data, as ADP Non-Farm and Employment Change and Unemployment Claims both looked sharp. There are on Canadian releases for the remainder of the week. On Wednesday, the Federal Reserve issued a policy statement, saying that it would continue its current levels of QE and expressing cautious optimism about the US economy. As well, ADP Non-Farm Payrolls and US GDP easily beat their estimates.

US releases continued to look sharp on Thursday. The all-important Unemployment Claims sparkled, as the indicator posted its lowest figure since May, at 326 thousand. This was a sharp drop from the previous reading of 343 thousand, and easily surpassed the estimate of 346 thousand. Not to be outdone, ISM Manufacturing PMI climbed from 50.9 to 55.4 points, its best performance since May 2011. These strong releases come on the heels of Advance GDP and ADP Non-Farm Payrolls, which looked very sharp as well. We could see the US dollar post broad gains as a result of these excellent numbers.

Anyone expecting dramatic news from the Federal Reserve on Wednesday came home empty-handed. As expected, the Fed said it would continue with the present level of QE, which involves $85 billion in asset purchases each month, and gave no indication about when it might scale down QE. There has been talk that the Fed could taper QE as early as September, and the speculation and uncertainty will likely continue to cause volatility in the markets as long as the Fed doesn’t show its cards. The Fed gave a cautious thumbs-up to current economic activity, noting that the economy was growing at a “modest” pace.

Canada also released GDP numbers on Wednesday. Unlike in the US, these figures are on a monthly basis. GDP has shown only modest growth in 2013, with the sharpest gain reaching just 0.3%. The July reading came in at 0.2%, matching the market forecast. The US economy continues to outperform its neighbor to the North, and the Canadian dollar could lose ground if Canadian releases don’t improve.

 

USD/CAD for Thursday, August 1, 2013

Forex Rate Graph 21/1/13
USD/CAD August 1 at 14:50 GMT

USD/CAD 1.0319 H: 1.0329 L: 1.0265

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0157 1.0229 1.0282 1.0337 1.0442 1.0502

 

USD/CAD has posted gains in Thursday trading. The pair crossed above the 1.03 level in the European session. USD/CAD continues to face resistance at 1.0337. This line has weakened significantly as the pair trades at higher levels. This is followed by stronger resistance at 1.0442. On the downside, 1.0282 is providing support. 1.0229 is the next support line. It has remained intact since mid-June.

  • Current range: 1.0282 to 1.0337

 

Further levels in both directions:

  • Below: 1.0282, 1.0229, 1.0157, 1.0062 and 1.00
  • Above: 1.0337, 1.0442, 1.0502, 1.0573, 1.0652

 

OANDA’s Open Positions Ratio

USD/CAD ratio has shifted directions and is pointing to movement towards short positions in Thursday trading. This is not reflected in the pair’s current movement, as the US dollar has posted gains. We have seen a steady shift in the ratio towards long positions since mid-July. As a result, long positions enjoy a substantial majority of positions, indicating strong trade bias towards the US dollar posting gains against the Canadian currency.

USD/CAD has bounced back from some losses on Wednesday, as the US dollar has posted gains against the loonie. We can expect the pair to settle down, although the pair could still post some small gains.

 

USD/CAD Fundamentals

  • 12:30 US Unemployment Claims. Estimate 346K. Actual 326K.
  • 13:00 US Final Manufacturing PMI. Estimate 52.1 points. Actual 53.7 points.
  • 14:00 US ISM Manufacturing PMI. Estimate 52.1 points. Actual 55.4 points.
  • 14:00 US Construction Spending. Estimate 0.4%. Actual -0.6%.
  • 14:00 US ISM Manufacturing Prices. Estimate 53.0 points. Actual 49.0 points.
  • 14:30 US Natural Gas Storage. Estimate 55B. Actual 59B.

 

*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.