USD/CAD – Canadian Dollar Drops on Poor Canadian Job Numbers

The Canadian dollar has lost close to 100 points on Monday, as USD/CAD trades in the low-1.19 range in the North American session. It’s a quiet start to the week on the release front. The only US release today was the Labor Conditions Market Index, which jumped to 6.1 points. As well, FOMC member Dennis Lockhart will deliver a speech in Atlanta. In Canada, the BOC released its business outlook survey.

US releases wrapped up the week in fine fashion, as employment data shined. Nonfarm Employment Change, one of the most important indicators, posted a gain of 252 thousand, easily beating the estimate of 241 thousand. The unemployment rate fell to 5.6%, edging below the forecast of 5.7%. Meanwhile, Average Earnings dropped 0.2%, its first decline since July 2013. A lack of wage pressure means that the Fed may be able to postpone a rate hike until the second half of 2015.

December employment numbers were much worse in Canada, as Employment Change surprised with a decline of 4.3 thousand, nowhere near the forecast of 10.3 thousand. The unemployment rate remained unchanged at 6.6%. Building Permits, another key release, looked awful with a decline of 13.8%, a 3-month low.

On Monday, the BOC released its business outlook survey, released every quarter. The BOC found that the US recovery should help manufacturers or exporters, but businesses connected to the energy sector are in for a rough ride in 2015, due to battered oil prices. The survey found that on balance, there is less optimism about the economic conditions compared to the findings from the autumn survey.

USD/CAD for Monday, January 12, 2015

USD/CAD January 12 at 16:10 GMT

USD/CAD 1.1931 H: 1.1938 L: 1.1836

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.1669 1.1723 1.1875 1.1975 1.2096 1.2190

 

  • USD/CAD showed limited movement in the Asian session. The pair posted strong gains in the European session, breaking above resistance at 1.1875. The Canadian dollar remains under pressure in North American trade.
  • 1.1975 is a weak resistance line. It could face pressure during the North American session.
  • 1.1875 has switched to a support role as the pair trades at higher levels. 1.1723 is a stronger line.
  • Current range: 1.1875 to 1.1975

Further levels in both directions:

  • Below: 1.1875, 1.1723, 1.1669, 1.1580 and 1.1493
  • Above: 1.1975, 1.2096, 1.2190 and 1.2261

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Monday. This is not consistent with the pair’s movement, as the Canadian dollar has posted losses. The ratio has a majority of short positions, indicative of trader bias towards the Canadian dollar reversing directions and moving to higher ground.

USD/CAD Fundamentals

  • 15:10 US Labor Market Conditions Index. Actual 6.1 points.
  • 15:30 BOC Business Outlook Survey.
  • 17:40 US FOMC Member Dennis Lockhart Speaks.

*Key releases are highlighted in 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.