USD/CAD – Steady as US,Canadian Employment Data Disappoints

The Canadian dollar is holding its own on Friday, as USD/CAD trades in the high-1.08 range early in the North American range. Employment numbers from the US and Canada were weak on Friday, disappointing the markets.  In the US, Nonfarm Employment Change dropped sharply to 142 thousand, while Canadian Employment Change declined by 11 thousand. The US unemployment rate edged lower to 6.1%, with the Canadian rate remaining steady at 7.0%. Both readings matched the forecast.

US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand, its lowest gain since January. The markets had expected a gain of 226 thousand. This follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims. There was better news from the services sector, as the ISM Non-Manufacturing PMI continued its impressive climb, hitting 59.6 points in August, well above the estimate of 57.3. This reading follows the ISM Manufacturing PMI, which climbed to 59.0 points. The impressive readings from the manufacturing and services sectors point to a balanced economic recovery. If US numbers continue to improve, we could see an interest rate hike in the early part of 2015.

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. Canadian employment numbers are a crucial factor in any rate decision, and Employment Change surprised with a decline of 11.0 thousand in August, the second decline in three readings. The markets had anticipated a gain of 10.3 thousand.

USD/CAD for Friday, September 5, 2014

USD/CAD September 5 at 14:20 GMT

USD/CAD 1.0885 H: 1.0902 L: 1.0841

USD/CAD Technical

• USD/CAD has been calm for most of the day. The pair dipped to a low of 1.0840 late in the European session, but was unable to consolidate at this level.
• 1.0852 remains an immediate support line and could face more pressure. 1.0775 is stronger.
• 1.0961 is the next 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 long positions on Friday, reversing the direction seen a day earlier. This is not consistent with the movement of the pair, which has not shown much activity. The ratio has a majority of long positions, indicating trader bias towards the US dollar moving higher.

USD/CAD Fundamentals

• 00:15 US FOMC Member Richard Fisher Speaks.
• 1:00 US FOMC Member Narayana Kocherlakota Speaks.
• 12:30 Canadian Employment Change. Estimate +10.3K. Actual -11.0K.
• 12:30 Canadian Unemployment Rate. Estimate 7.0%. Actual 7.0%.
• 12:30 Canadian Labor Productivity.  Estimate 0.1%. Actual 1.8%.
• 12:30 US Nonfarm Employment Change. Estimate 226K. Actual 142K.
• 12:30 US Unemployment Rate. Estimate 6.1%. Actual 6.1%. 
• 12:30 US Average Hourly Earnings. Estimate 0.2%. Actual 0.2%.

* Key releases are in highlighted bold.

*All release times are GMT

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