USD/CAD is trading quietly in Monday trading, as the pair was trading in the 1.0270 range. The pair has been edging lower, since last week, when USD/CAD was as high as 1.0330. There are no releases scheduled from Canada or the US on Monday.
ECB policymakers voted to maintain the benchmark interest rate at 0.75% last week. Although the markets expected the rate to remain steady, and ECB head Mario Draghi didn’t have anything new to share at the ECB press conference, the markets were pleased, and the euro took advantage, gaining a cent against the dollar. Draghi once again reminded us that, yes, the Eurozone economy is having a tough go of it, but things will improve later in the year. Draghi also reassured his listeners that the crisis in Italy would not spread, but did call on member countries to implement needed structural reforms, in what could be seen as a hint to Italy to continue with its austerity measures in order to get its economy headed in the right directions. The ECB’s decision to maintain rates was not unanimous, as some policymakers wanted to lower rates. Given the lackluster performance of the Eurozone, with the notable exception of Germany, the ECB could well step in and lower rates if the Eurozone economy fails to turn around.
On Friday, both US and Canadian employment numbers were very sharp. In the US, Unemployment Claims dropped to 340K, well below the estimate of 354K. Non-Farm Employment Claims hit 236 thousand, easily exceeding the forecast of 162 thousand. The Unemployment rate fell, dropping to 7.7% from 7.9%. The strong figures helped the dollar post sharp gains against the euro at the end of the week, and we could see the greenback make further gains if US number numbers continue to look sharp. The strong data has raised speculation that the Fed might wind up its current round of QE, which involves the purchase of $85 billion in assets each month. Previously, the Fed has said that the open-ended asset purchases would continue until unemployment fell to 6.5%. However, if the economy continues to show signs of improvement, the Fed will face pressure to wind up or at least modify the current asset purchase program. Canadian employment numbers followed pace with the strong figures south of the border. Employment Change posted a gain of 50.7 thousand, blowing past the estimate of 7.8 thousand. The key indicator bounced back after a dismal reading in February, much to the delight of the markets. The Unemployment Rate remained at 7.0%, slightly better than the 7.1% estimate. Although the loonie did push higher on Friday, it failed to sustain the upward momentum and closed unchanged on the day.
USD/CAD for Monday, March 11, 2013
USD/CAD March 11 at 14:50 GMT
1.0285 H: 1.0294 L: 1.0279
USD/CAD continues to trade in a narrow range. The pair is testing support at 1.0282. This line has already been breached and looks to face more activity. The next support level is at 1.0229. On the upside, there is support at 1.0361. This line has remained intact since June 2012.
- Current range: 1.0282 to 1.0361
Further levels in both directions:
- Below: 1.0282, 1.0229, 1.0157, 1.01, 1.0041 and 1.00
- Above: 1.0361, 1.0446, 1.0523 and 1.0642
OANDA’s Open Position Ratios
The USD/CAD ratio is pointing to strong movement towards long positions. This is not reflected in the pair’s movement in Monday trading, as USD/CAD remains rangebound. The activity in the ratio could signal that the US dollar will post some gains against the Canadian currency.
Friday saw some excellent numbers from both the US and Canada, but the pair remained unchanged at the end of the day. As we start the new trading week, the pair continues to trade quietly. With no releases from either Canada or the US, we could see more drifting from the pair.
- There are no releases from Canada or the US on Monday.
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