USD/CAD – Loonie Slips Despite Strong Building Permits

USD/CAD has moved back above the 1.09 line on Monday. Canadian Building Permits posted an excellent gain of 11.2% in August, but the Canadian dollar failed to take advantage. In the US, it’s a quiet start to the week, with no major releases on Monday.

US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand on Friday, 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 strong 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.

Weakness in the Canadian job sector was underlined on Friday, as 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. As expected, the BOC held interest rates at 1.0% last week. 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 whether rates move up or down will depend on the strength of the economy and the employment outlook.

USD/CAD for Monday, September 8, 2014

USD/CAD September 8 at 14:45 GMT

USD/CAD 1.0921 H: 1.0928 L: 1.0884

USD/CAD Technical

• USD/CAD has been edging higher for most of the day and the Canadian dollar remains under pressure.
• On the downside, 1.0852 has some breathing room as the pair trades at higher levels. 1.0775 is stronger.
• 1.0961 is an immediate 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 Monday, continuing the direction seen on Friday. This is consistent with the movement of the pair, as the US dollar has posted gains. The ratio has a majority of long positions, indicating trader bias towards the US dollar continuing to move higher.

USD/CAD Fundamentals

• 12:30 Canadian Building Permits. Estimate -4.2%. Actual +11.8%.
• 12:45 US Treasury Secretary Jack Lew Speaks.
• 19:00 US Consumer Credit. Estimate 17.4B.

* Key releases are in highlighted bold.

*All release times are GMT

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