USD/CAD – Canadian Dollar Improves on Stronger US Unemployment Claims

The Canadian dollar has posted gains on Thursday and dropped back below the 1.10 level, as USD/CAD trades in the mid-1.09 range in the North American session. On the release front, US Unemployment Claims dropped to 280 thousand, but Building Permits softened last month. The Philly Fed Manufacturing Index fell sharply in August. As well, Fed Chair Janet Yellen spoke at a conference in Washington. In Canada, Foreign Securities Purchases improved last month and beat the forecast.

There was good news from Canada’s manufacturing sector, as Manufacturing Sales, a key release, jumped 2.5% in August. This easily beat the estimate of 1.1%. This was the indicator’s strongest gain since March 2013, and helped the Canadian dollar gain close to a cent on Tuesday.

US Unemployment Claims has looked sluggish over the past two readings, but that changed on Thursday, as the key indicator sparkled, dropping to 280 thousand, down sharply from 315 thousand in the previous reading. The estimate stood at 312 thousand. Building Permits was not as strong, dipping to 1.00M. This was shy of the estimate of 1.04M. There was disappointing news from the manufacturing front, as the Philly Fed Manufacturing Index slipped to 22.5 points, down from 28.0 a month earlier. The estimate stood at 22.8 points.

US inflation data was worse than expected on Wednesday. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.

Will the United Kingdom still be united on Friday? It’s anyone’s guess as Scottish voters cast their ballots in a historic referendum on independence on Thursday. The most recent polls are pointing to a close vote, with many voters still undecided. If voters do choose to secede from the UK, this would create plenty of questions and uncertainty, including what currency an independent Scotland would use and how the national debt would be divided. A vote to split up the UK could lead to turmoil in the markets and weigh heavily on the markets. Traders should treat the referendum as a market-mover, as a vote in favor of independence could have negative repercussions for the markets.

 

USD/CAD for Thursday, September 18, 2014

USD/CAD September 18 at 15:10 GMT

USD/CAD 1.0942 H: 1.1016 L: 1.0930

 

USD/CAD Technical

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

 

  • USD/CAD moved lower late the Asian session and has continued in this direction in the European and North American sessions.
  • 1.0961 is an immediate resistance line and could see further action during the day. 1.1004 is next.
  • 1.0852 is a strong support line.
  • Current range: 1.0852 to 1.0961

Further levels in both directions:

  • Below: 1.0852, 1.0775, 1.0678 and 1.0560
  • Above: 1.0961, 1.1004, 1.1124, 1.1278 and 1.1414

 

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged on Thursday. This is not consistent with the movement of the pair, as the Canadian dollar has posted gains. The ratio has a majority of long positions, indicating trader bias towards the US dollar reversing its downward move.

 

USD/CAD Fundamentals

  • 12:30 Canadian Foreign Securities Purchases. Estimate 2.4B. Actual 5.30B.
  • 12:30 US Building Permits. Estimate 1.04M. Actual 1.00M. 
  • 12:30 US Unemployment Claims. Estimate 312K. Actual 280K.
  • 12:30 US Housing Starts. Estimate 1.04M. Actual 0.96M.
  • 12:45 US Federal Reserve Chair Janet Yellen Speaks.
  • 14:00 US Philly Fed Manufacturing Index. Estimate 22.8 points. Actual 22.5 points.
  • 14:30 US Natural Gas Storage. Estimate 91B. Actual 90B.

* 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.