USD/CAD: Under Pressure on Weak Ivey PMI

USD/CAD has posted modest gains in Monday’s North American session, as the pair trades in the high-1.06 range. Canada kicked off the week with two key releases which pointed in opposite directions. Building PMI jumped to a ten-month high, but Ivey PMI slipped to its lowest level in 2o14. As well, the BOC released its quarterly Business Outlook Survey. The report found that Canadian business sentiment was generally positive, with little change in the second quarter. There are no US releases on Monday.

Canadian key data was a mix on Monday. Ivey PMI has been steadily losing ground since February, and the downward trend continued in June. The index fell to 46.9 points, its lowest level since last December. The indicator came in below the 50-point level for a second straight month, indicating contraction. There  was better news from Building Permits, which tends to show sharp fluctuations. The key construction indicator surprised the markets with a sharp gain of 13.8%, crushing the estimate of 3.1%. This was the indicator’s best showing since last August.

In the US, employment data sparkled last week. Nonfarm Payrolls led the way, as the key indicator bounced back in June with a strong release, coming in at 288 thousand new jobs. This crushed the estimate of 214 thousand. Unemployment Claims was steady at 315 thousand, almost replicating the estimate of 314 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be under the market microscope.

 

USD/CAD for Monday, July 7, 2014

USD/CAD July 7 at 15:50 GMT

USD/CAD 1.0670 H: 1.0677 L: 1.0631

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0271 1.0414 1.0572 1.0678 1.0775 1.0852

 

  • USD/CAD was quiet in the Asian session. The pair edged lower in the European session, but has made an upwards push in North American trading, touching a high of 1.0677.
  • On the upside, 1.0678 is under strong pressure. 1.0775 is stronger.
  • 1.0572 is providing the pair with strong support.
  • Current range: 1.0572 to 1.0678

Further levels in both directions:

  • Below: 1.0572, 1.0414, 1.0271 and 1.0182
  • Above: 1.0678, 1.0775, 1.0852 and 1.0961

 

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in Monday trade. This is not consistent with the movement of pair, as the Canadian dollar has posted slight losses to start off the week. The ratio has a majority of long positions, indicative of trader bias towards the US dollar gaining ground.

 

USD/CAD Fundamentals

  • 12:30 Canadian Permits Permits. Estimate 3.1%. Actual 13.8%.
  • 14:00 Canadian Ivey PMI. Estimate 51.3 points. Actual 46.9 points.
  • 14:30 Bank of Canada Business Outlook Survey.

*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.