USD/CAD – Canadian Dollar Improves on Strong Canadian Trade Data

The Canadian dollar continues to improve on Thursday, as USD/CAD trades in the mid-1.08 range. The pair has dropped closed to 100 points since Tuesday. In the US, employment data was soft, as ADP Nonfarm Payrolls and Unemployment Claims both missed expectations. Trade Balance beat the estimate , while ISM Non-Manufacturing PMI improved in August, but missed expectations. The sole Canadian release, Trade Balance, jumped to $2.6 billion in August.

US employment numbers were a disappointment on Thursday. ADP Nonfarm Payrolls slipped to 204 thousand last month, marking a 3-month low. This was well off the estimate of 218 thousand. Unemployment Claims edged higher to 302 thousand, above the estimate of 298 thousand. Will the official Nonfarm Payrolls follow suit with a weak reading? Last month’s release missed expectations, and if the key indicator repeats with another weak reading, the US dollar could lose more ground to its Canadian counterpart.

As expected, the BOC held interest rates at 1.0% on Wednesday. The rates have remained steady for 4 years, the longest lack of movement since the 1950s. The central bank remains in a neutral stance, noting that there is slack in the economy. A rate move is unlikely before 2015, and what direction rates would move depends on the strength of the economy. Meanwhile, Canadian Trade Balance jumped to $2.6 billion, its largest surplus since January 2012.

 

USD/CAD for Thursday, September 4, 2014

USD/CAD September 4 at 14:00 GMT

USD/CAD 1.0876 H: 1.0943 L: 1.0872

 

USD/CAD Technical

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

 

  • USD/CAD lost ground in the Asian and European sessions. The US dollar remains under pressure in the North American session.
  • 1.0852 is an immediate support line. Will the pair break below this barrier? 1.0775 is stronger.
  • On the upside, 1.0961 is a strong resistance line.
  • 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 short positions on Thursday. This is consistent with the movement of the pair, as the Canadian dollar continues to post gains. The ratio has a slight majority of long positions, indicating modest trader bias towards the US dollar reversing its downward slide.

 

USD/CAD Fundamentals

  • 11:30 US Challenger Job Cuts. Actual -20.7%.
  • 12:15 US ADP Non-Farm Employment Change. Estimate 218K. Actual 204K.
  • 12:30 Canadian Trade Balance. Estimate 1.1B. Actual 2.68B.
  • 12:30 US Trade Balance. Estimate -42.5B. Actual -40.5B.
  • 12:30 US Unemployment Claims. Estimate 298K. Actual 302K.
  • 12:30 US Revised Nonfarm Productivity. Estimate 2.5%. Actual 2.3%.
  • 12:30 US Revised Unit Labor Costs. Estimate 0.6%. Actual -0.1%.
  • 13:45 US Final Services PMI. Estimate 58.5 points. Actual 59.5 points.
  • 14:00 US ISM Nonfarm Manufacturing PMI. Estimate 57.3 points. Actual 59.6 points.
  • 14:30 US Natural Gas Storage. Estimate 72B.
  • 15:00 US Crude Oil Inventories. Estimate -0.9M.
  • 16:30 US FOMC Member Loretta Mester Speaks.
  • 23:00 US FOMC Member Jerome Powell Speaks.

* 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.