USD/CAD – Loonie Improves on Positive Canadian Sales Data

The Canadian dollar has posted gains on Friday, as USD/CAD has dipped below the 1.09 line late in the European session. On the release front, both Canada and the US released key data. Canadian Manufacturing Sales posted a gain of 0.6% in July. In the US, PPI showed a paltry gain of 0.1%, while the Empire State Manufacturing Index weakened, coming in at 14.7 points. We’ll get a look at US consumer sentiment data later in the day.

Canadian Manufacturing Sales, a key event, softened in July, with a gain of 0.6%, compared to 1.6% last month. However, the reading did beat the estimate of 0.5%. The Canadian dollar has responded by hitting its highest level in two weeks, as USD/CAD has dropped into 1.08 territory. Will the pair’s momentum continue into the North American session?

With the US continuing to suffer from low inflation levels, markets expectations have been low for key inflation indicators. On Friday, PPI, the primary gauge of inflation in the manufacturing sector, slipped to 0.1%, down from 0.4% a month earlier. This matched the estimate. Weak inflation is one reason why the Federal Reserve is not in a rush to raise interest rates, as low inflation points to slack in the economy. On the manufacturing front, the Empire State Manufacturing Index plunged to 14.3 points, down from 23.6 points in the previous release. This marked a three-month low and was well of the estimate of 20.3 points.

On Thursday, US Unemployment Claims came in higher than expected. The indicator climbed to 311 thousand, marking a six-week high. The estimate stood at 307 thousand. Employment indicators are being closely scrutinized by analysts, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate increase is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a move by the Fed. Earlier in the week, JOLTS Job Openings hit its highest level in 13 years, although it too missed expectations.

 

USD/CAD for Friday, August 15, 2014

USD/CAD August 15 at 12:35 GMT

USD/CAD 1.0904 H: 1.0908 L: 1.0888

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0678 1.0775 1.0852 1.0961 1.1004 1.1124

 

  • USD/CAD edged lower in the Asian session. The pair dipped to a low of 1.0888 earlier in the European session, but has bounced back above the 1.09 line.
  • 1.0961 is the next resistance line. 1.1004 is next.
  • 1.0852 is providing support. 1.0775 follows.
  • Current range: 1.0852 to 1.0961

Further levels in both directions:

  • Below: 1.0852, 1.0775, 1.0678 and 1.0588
  • Above: 1.0961, 1.1004, 1.1124 and 1.1278

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions in Friday trade. This is consistent with the pair’s movement, as the Canadian dollar has posted small gains. The ratio has a small majority of short positions, indicative of slight trader bias towards the Canadian dollar moving higher.

 

USD/CAD Fundamentals

  • 12:30 Canadian Manufacturing Sales. Estimate 0.5%. Actual 0.6%.
  • 12:30 US PPI. Estimate 0.1%. Actual 0.1%.
  • 12:30 US Core PPI. Estimate 0.2%. Actual 0.4%.
  • 12:30 US Empire State Manufacturing Index. Estimate 20.3 points. Actual 14.7 points.
  • 13:00 US TIC Long-Term Purchases. Estimate 27.3B points.
  • 13:15 US Capacity Utilization Rate. Estimate 79.2%.
  • 13:15 US Industrial Production. Estimate 0.3%.
  • 13:55 US Preliminary UoM Consumer Sentiment. Estimate 82.7 points.
  • 13:55 US Preliminary UoM Inflation Expectations.

* Key releases are in highlighted 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.