USD/CAD – Flat in Thin Holiday Trade

USD/CAD is almost unchanged on Monday, as the pair trades in the mid-1.19 range in the North American session. Trade is thin today, as US markets are closed for the Martin Luther King holiday. In Canada, the sole release was Foreign Securities Purchases. The indicator softened in November, falling to C$4.29 billion. This marked a 5-month low. On Tuesday, Canada releases Manufacturing Sales, a key indicator that could affect the movement of USD/CAD.

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.

Currency markets were in shock on Thursday, as the Swiss National Bank abruptly abandoned its cap on the exchange rate between the euro and the franc, which had a floor of 1.20 for EUR/CHF. The cap had been in place since 2011, and the move marks a major policy reversal for the normally conservative Swiss central bank. Market reaction was swift, as the euro dropped some 15% against the franc, as the pair is currently trading at parity.

What was the reasoning behind the SNB bombshell? One answer is an attempt to fight deflation, which is hurting the Swiss economy. As well, with the euro losing value, the SNB has had to increase its euro purchases to keep EUR/CHF within the cap, and the SNB may have finally soured on the common currency. The stunning move indicates that the SNB believes that the ECB will implement quantitative easing at its policy meeting on Thursday and didn’t want to have to prop up the ailing common currency, which will likely lose ground after a QE move.

USD/CAD for Monday, January 19, 2015

USD/CAD January 19 at 16:00 GMT

USD/CAD 1.1959 H: 1.1986 L: 1.1950

 

USD/CAD Technical

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

 

  • USD/CAD is almost unchanged on Monday, as the pair trades just below the 1.1975 line.
  • On the upside, 1.1975 was tested earlier and remains under strong pressure. 1.2096 is stronger.
  • 1.1875 is providing strong support.
  • 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 long positions on Monday. This is not consistent with the pair’s movement, as the pair is unchanged. The ratio has a majority of short positions, indicative of trader bias towards the Canadian dollar moving to higher ground.

USD/CAD Fundamentals

  • 13:30 Canadian Foreign Securities Purchases. Estimate 7.23B. Actual 4.29B.

*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.