USD/CAD – Edges Higher As US Posts Strong Employment, GDP Numbers

The Canadian dollar has reversed directions in Thursday trading, as USD/CAD has edged higher. Early in the North American session, the pair is trading in the low-1.04 range. Taking a look at economic news, there were two key releases out of the US earlier in the day. Advance GDP posted a sharp gain, while Unemployment Claims dropped slightly and matched the forecast. There are no Canadian releases on Thursday.

US key releases continue to enjoy a strong week. Advanced GDP jumped 2.8% in Q3, hitting its highest levels since Q4 of 2011. The estimate stood at 2.0%, so the US economy is expanding faster than anticipated by the markets. Unemployment Claims dropped slightly last week, coming in at 336 thousand. This was the strongest release in five weeks. We’ll get another look at key employment data on Friday, as the US releases Non-Farm Payrolls. The markets are expecting a weak October release of 120 thousand, but the release is expected to be distorted due to layoffs during last month’s government shutdown.

At its most recent meeeting, the Bank of Canada maintained interest rates at 1%. However, the Bank removed its tightening bias, which had been in place since April 2012, indicates that the Bank is in no hurry to raise interest rates for the foreseeable future. This could result in investors searching for better returns outside of Canada, which could push the Canadian dollar to lower levels.

Canadian releases have had a good week, helping the Canadian dollar hold its own against the US dollar. Building Permits, known for sharp fluctuations, posted a gain of 1.7% in September, compared to a decline of 21.2% the month before. However, the markets had expected a gain of 7.8%. Ivey PMI, another key indicator, rose sharply, from 51.9 points in September to 62.8 in October. This crushed the estimate of 54.7 and was the strongest showing since June. Canada wraps up the week with key employment data on Friday, with the release of Employment Change and the Unemployment Rate.

USD/CAD for Thursday, November 7, 2013

USD/CAD November 7 at 15:15 GMT

USD/CAD 1.0441 H: 1.0450 L: 1.0406

USD/CAD Technical

• USD/CAD has edged higher in Thursday trading. The US dollar showed some strength late in the European session, touching a high of 1.0449.
• On the upside, the pair is putting strong pressure on 1.0442. This line was breached earlier and we could see it fall during the North American session. This is followed by strong resistance at 1.0502.
• USD/CAD continues to receive support at 1.0337. This is followed by a support line at 1.0282, which has remained intact since late October.
• Current range: 1.0337 to 1.0442

Further levels in both directions:

• Below: 1.0337, 1.0282, 1.0224 and 1.0158
• Above 1.0442, 1.0502, 1.0573, 1.0652 and 1.0837

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed directions on Thursday, pointing to gains by long positions. This is reflected in the current movement of the pair, as the US dollar has posted gains against its Canadian counterpart. 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 US dollar has resumed its upward trend, as the pair trades in the mid-1.04 range. With the Canadian dollar under pressure after strong US data earlier, we could see USD/CAD post further gains during the North American session.

USD/CAD Fundamentals

• 13:30 US Advance GDP. Estimate 2.0%. Actual 2.8%
• 13:30 US Unemployment Claims. Estimate 336K. Actual 336K.
• 13:30 US Advance GDP Price Index. Estimate 1.5%. Actual 1.9%.
• 15:00 US Mortgage Delinquencies. Actual 6.41%.
• 15:30 US Natural Gas Storage. Estimate 40B. Actual 35B.
• 18:30 FOMC Member William Dudley Speaks.
• 18:50 FOMC Member Jeremy Stein Speaks.
• 20:00 US Consumer Credit. Estimate 13.0B.

*Key releases are highlighted in bold

*All release times are GMT

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