USD/CAD – Limited Movement as US Posts Solid GDP

The Canadian dollar is stable on Thursday, as USD/CAD trades just shy of the 1.12 line in the North American session. On the release front, US GDP posted a strong gain of 3.5% in Q3, while Unemployment Claims showed little change, coming in at 287 thousand. There are no Canadian events on Thursday, but the markets are keeping an eye on GDP, which will be released on Friday. In contrast to Thursday’s US GDP release, the markets are keeping expectations very low, with the estimate standing at 0.0%.

It was another solid performance from US GDP, which posted a strong gain of 3.5% in Q3, ahead of the estimate of 3.1%. Although this was short of the Q2 reading of 4.0%, the two readings mark the strongest six-month gain we’ve seen in ten years. Unemployment Claims increased slightly to 287 thousand, slightly higher than the previous reading of 284 thousand. However, the four-week average remains at multi-year lows, pointing to an improving labor market.

The US dollar posted strong gains on Wednesday, boosted by a hawkish Federal Reserve policy statement. The Fed said that the labor market is strengthening and inflation remains on target, although it did note that the labor market participation rate remains low. As expected the Fed completed the taper of its QE3 program. The asset-purchase program was initially started in 2008, at the height of the economic crisis, in order to boost a weak US economy. The termination of the QE is a symbolic step which is a vote of confidence from the powerful Fed that the US economy is on the right track

The Canadian dollar shrugged off weak Canadian inflation data on Wednesday. The Raw Materials Price Index dropped 1.8%, its third straight decline. The indicator fell short of the forecast of -0.8%. The Industrial Product Price Index followed suit, coming in at -0.4%, coming in shy of the estimate of 0.0%. Like its southern neighbor, Canada has not been able to shake off low inflation levels, which point to weak economic activity.

USD/CAD for Thursday, October 30, 2014

USD/CAD October 30 at 17:40 GMT

USD/CAD 1.1195 H: 1.1223 L: 1.1165

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0961 1.1004 1.1124 1.1278 1.1414 1.1493

 

  • USD/CAD has been marked by choppy trading but is unchanged on the day, trading very close to the 1.12 line.
  • 1.1124 remains immediate support level.
  • 1.1278 is a strong resistance line.
  • Current range: 1.1124 to 1.1278

Further levels in both directions:

  • Below: 1.1124, 1.1004, 1.0961 and 1.0865
  • Above: 1.1278, 1.1414, 1.1493 and 1.1669

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Thursday. This is not consistent with the pair, which is unchanged on the day. The ratio has a majority of short positions, indicating trader bias towards the Canadian dollar moving to higher ground.

 

USD/CAD Fundamentals

  • 12:30 US Advance GDP. Estimate 3.1%. Actual 3.5%.
  • 12:30 US Unemployment Claims. Estimate 284K. Actual 287K.
  • 14:30 US Advance GDP Price Index. Estimate 2.0%. Actual 1.3%.
  • 13:00 US Federal Reserve Chair Janet Yellen Speaks.
  • 14:30 US Natural Gas Storage. Estimate 83B. Actual 87B.

* 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.