USD/CAD – Strong Volatility After Weak US Numbers

The Canadian dollar took traders on a wild roller coaster ride on Thursday, as USD/CAD dropped over 100 points before recovering. In the North American session, USD/CAD is trading in the low-1.19 range, showing small losses on the day. In today’s releases, it was a disappointing day in the US. Unemployment Claims was unexpectedly weak, jumping to 316 thousand. PPI posted a decline of 0.3%, matching the forecast. Manufacturing data was mixed, as the Empire State Manufacturing Index rose to 10.3 points, while the Philly Fed Manufacturing Index slipped to 6.3 points. There are no Canadian releases on Thursday.

US employment numbers slipped on Thursday, as Unemployment Claims surprised with a reading of 316 thousand. This was well above the estimate of 299 thousand and was the highest reading since June 2014. However, the first full week of the year often shows a spike in claims, since holiday workers are dismissed, resulting in a higher number of claims. Earlier in the week, JOLTS Jobs Openings climbed to 4.97 million, easily beating the forecast of 4.86 million. This is the indicator’s highest level since January 2001. The strong employment numbers are a welcome result of the robust economy, as the deepening recovery fuels demand for more workers. The health of the labor market is an important component of any decision to raise interest rates, so upcoming employment releases will be under the market microscope as the Fed mulls when to raise interest rates.

Earlier in the week, US retail sales caught the markets off guard with sharp declines in the December readings. Core Retail Sales came in at -1.0%, while Retail Sales followed suit with a loss of 0.9%. Both key indicators recorded their worst showings since May 2010. However, retail sales were solid in the past two months, so the numbers for Q4 will be in positive territory.

USD/CAD for Thursday, January 15, 2015

USD/CAD January 15 at 16:20 GMT

USD/CAD 1.1913 H: 1.1996 L: 1.1803

 

USD/CAD Technical

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

 

  • USD/CAD was flat in the Asian session. The pair posted sharp losses in the European session, easily breaking below support at 1.1875. The pair reversed directions late in the session and has continued to move higher in North American trade.
  • 1.1975 is an immediate support line.
  • 1.1875 saw action during the day and remains a weak support level. 1.1723 is stronger.
  • 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 has posted gains in short positions on Thursday. This is consistent with the pair’s movement, as the pair has posted slight losses. The ratio has a majority of long positions, indicative of trader bias towards the pair moving to higher ground.

USD/CAD Fundamentals

  • 13:30 US PPI. Estimate -0.3%. Actual -0.3%.
  • 13:30 US Unemployment Claims. Estimate 299K. Actual 316K.
  • 13:30 US Core PPI. Estimate 0.2%. Actual 0.3%.
  • 15:00 US Empire State Manufacturing Index. Estimate 5.3 points. Actual 10.0 points.
  • 15:00 US Philly Fed Manufacturing Index. Estimate 20.3K. Actual 6.3 points.
  • 15:30 US Natural Gas Storage. Estimate -224B. Actual -236B.

*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.