USD/CAD – Building Permits, PMI Lift Loonie

The Canadian dollar rally continues, as the currency is trading in the mid-1.09 range in Thursday trade. The loonie has now gained over 100 points since Tuesday.  In economic news, Canadian Building Permits climbed sharply, Ivey PMI improved in February. There was good news on the US employment front, as Unemployment Claims dropped nicely.

Canadian Building Permits jumped by 8.5%, crushing the estimate of 1.9%. The reading marked a nine-month high for the key indicator, which tends to fluctuate strongly. Ivey PMI also improved in February, coming in at 57.2 points, above the estimate of 56.7. On Wednesday, the RBC held rates at the 1.0% level, as was widely expected.

In the US, there was a sigh of relief as Unemployment Claims looked solid and dropped to 323 thousand in February, down sharply from 348 thousand a week earlier. The estimate stood at 336 thousand. The US faces a big test on Friday, with the release of Nonfarm Payrolls. The markets are expecting an improvement in February, but the ADP Nonfarm Payroll release on Wednesday fell well short of the estimate. If Nonfarm Payrolls fails to meet expectations, we could see the US dollar lose ground.

Meanwhile, nervous markets are glued to the Ukraine, as Russia has effectively taken over Crimea following the ousting of the Ukrainian president, who has fled to Russia. The US and Russia continue to talk tough as the standoff between Russia and the Ukraine continue. Until this tense situation subsides, traders should be prepared for volatility in the currency markets.

 

USD/CAD for Thursday, March 6, 2014

Forex Rate Graph 21/1/13

USD/CAD March 6 at 16:10 GMT

USD/CAD 1.0970 H: 1.1046 L: 1.0956

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0783 1.0852 1.0906 1.1000 1.1094 1.11177

 

  • USD/CAD has posted modest losses in Thursday trading.
  • 1.1094 is the next resistance line. It is followed by 1.1174, which is protecting the 1.12 level.
  • The key line of 1.10 is providing support to the pair. It could face strong pressure if the Canadian dollar continues to improve. Next, there is support at 1.0906, protecting the 1.09 level.
  • Current range: 1.1000 to 1.1094

Further levels in both directions:

  • Below: 1.1000, 1.0906, 1.0852, 1.0783 and 1.0662
  • Above: 1.1094, 1.1177, 1.1319, 1.1496 and 1.1639

 

OANDA’s Open Positions Ratio

USD/CAD ratio is posting gains in Thursday trade. This is not consistent with what we are seeing from the pair, as the Canadian dollar continues to post gains. The ratio has a majority of short positions, indicating trader bias towards the loonie continuing to rally at the expense of the US dollar.

The Canadian dollar got some help from solid releases on Thursday and continues to improve. The US dollar remains under pressure in the North American session.

 

USD/CAD Fundamentals

  • 00:00 US FOMC Member Richard Fisher Speaks.
  • 1:15 Bank of Canada Senior Deputy Governor Tiff Macklem Speaks.
  • 12:30 US Challenger Job Cuts. Actual -24.4%.
  • 13:15 US FOMC Member William Dudley Speaks.
  • 13:30 Canadian Building Permits. Estimate 1.9%. Actual 8.5%.
  • 13:30 US Unemployment Claims. Estimate 336K. Actual 323K.
  • 13:30 US Revised Nonfarm Productivity. Estimate 2.6%. Actual 1.8%.
  • 13:30 US Revised Unit Labor Costs. Estimate -1.0%. Actual -0.1%.
  • 15:00 Canadian Ivey PMI. Estimate 56.7 points. Actual 57.2 points.
  • 15:00 US Factory Orders. Estimate -0.4%. Actual -0.7%.
  • 15:30 US Natural Gas Storage. Estimate -134B. Actual -152B.
  • 16:30 Bank of Canada Deputy Governor John Murray Speaks.
  • 18:00 US FOMC Member Charles Plosser Speaks.

*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.