USD/CAD – Limited Movement As Unemployment Claims Disappoints

USD/CAD is not showing much activity on Thursday, as the pair trades in the high-1.09 range in the North American session. In economic news, US Unemployment Claims was a disappointment, as the indicator jumped to a nine-week high. There was better news from ISM Manufacturing PMI, which beat the forecast. Federal Reserve chair Janet Yellen addresses a bank conference in Washington, and the markets will be all ears following the Fed policy statement earlier this week. There are no Canadian releases on Thursday.

US Unemployment Claims failed to impress on Thursday, as the key indicator jumped to 344 thousand, well above the estimate of 317 thousand. It marked a nine-week high, and comes just a day before Nonfarm Payrolls is released. If the latter follows suit with a weak reading, we could see the dollar take a hit. Meanwhile, ISM Manufacturing PMI hit a four-month high, as the index rose to 55.4 points. This was slightly shy of the estimate of 55.8 points.

As expected, the Federal Reserve trimmed its QE program by $10 billion on Wednesday. This marks the fourth cut since December, reducing the asset purchase scheme to $45 billion/month. The tapers are no longer creating headlines as they did just a few months ago, and the dollar didn’t get any lift against its major rivals. What interested the markets more was the Fed statement that interest rates would remain low for a “considerable time” after QE ends. The markets expect QE to wind up before the end of the year, so we could see a rate hike in early 2015, depending of course, on the strength of the US economy and the job market.

The ADP Nonfarm Payrolls were released on Wednesday, ahead of the critical official NFPs later in the week. The news was positive, as the indicator jumped to 220 thousand, marking a four-month low. This easily beat the estimate of 203 thousand. Advance GDP couldn’t keep pace, as the key indicator’s upward swing came to a crashing halt, with a Q1 gain of just 0.1%, compared to a 3.2% reading in Q4. This was well off the estimate of 1.2%. Is the US economy stalling? The weak reading could be a result of a harsh winter, but this will be of little consolation to the markets, and the dollar could lose ground against its major rivals.

The release of Canadian GDP earlier this week didn’t give the markets much to cheer about. The key economic indicator is released monthly, unlike its US counterpart which is issued every quarter. GDP dipped to 0.2%, down from 0.5% a month earlier. However, this matched the estimate, so the markets didn’t raise too many eyebrows and the loonie has managed to hold its own as it continues to trade slightly below the 1.10 barrier.

 

USD/CAD for Thursday, May 1, 2014

Forex Rate Graph 21/1/13

USD/CAD May 1 at 15:00 GMT

USD/CAD 1.0977 H: 1.0996 L: 1.0960

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0777 1.0852 1.0906 1.10 1.1094 1.1177

 

  • USD/CAD continues to show limited movement. The pair touched a high of 1.0996 in the European session.
  • 1.0906 is providing support. This is followed by a support line at 1.0852, which has held since January.
  • On the upside, 1.10 held firm as the Canadian dollar tested the key level earlier in the day. This is followed by 1.1177.
  • Current range: 1.0906 to 1.10

Further levels in both directions:

  • Below: 1.0906, 1.0852, 1.0775 and 1.0706
  • Above: 1.10, 1.1094, 1.1177, 1.1319 and 1.1496

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions in Thursday trading, reversing the direction we saw a day earlier. This is not reflected in the current movement of the pair, as the US dollar has edged higher. The ratio has a majority of long positions, indicative of a trader bias in favor of the US dollar moving to higher ground.

USD/CAD is not showing much activity, as the pair continues to trade slightly below the 1.10 line. In the North American session, the pair has edged lower.

 

USD/CAD Fundamentals

  • 11:30 US Challenger Job Cuts. Actual 5.7%.
  • 12:30 US Fed Chair Janet Yellen Speaks.
  • 12:30 US Unemployment Claims. Estimate 317K. Actual 344K.
  • 12:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.2%.
  • 12:30 US Personal Spending. Estimate 0.7%. Actual 0.9%.
  • 12:30 US Personal Income. Estimate 0.4%. Actual 0.5%.
  • 13:45 US Final Manufacturing PMI. Estimate 55.8 points. Actual 55.4 points.
  • 14:00 US ISM Manufacturing PMI. Estimate 54.3 points. Actual 54.9 points.
  • 14:00 US Construction Spending. Estimate 0.5%. Actual 0.2%.
  • 14:00 US ISM Manufacturing Prices. Estimate 59.4 points. Actual 56.5 points.
  • 14:30 US Natural Gas Storage. Estimate 75B.
  • All Day – US Total Vehicle Sales. Estimate 16.2M.

*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.