USD/CAD continued where it left off last week, as the pair continues to trade in a narrow range as we begin the new trading week. Early in Monday’s North American session, USD/CAD was trading just under the 1.01 level. The pair has not reacted as Canadian Building Permits were outstanding. The key indicator had its best showing of the year, posting a gain of 8.6%. This blew away the estimate of 0.7%. Later on today, Canada will release another key event, Ivey PMI. There are no US releases on Monday.
In Japan, the yen is back to its losing ways after its recent improvement against the US dollar. The Japanese currency crossed above the 99 line on Friday, and is again within striking distance of the elusive 100 line. At its recent policy meeting, the BoJ noted that it could take more than two years to reach its 2% inflation target. This possibility has been underscored by recent Japanese inflation releases, which continue to point to deflation in the economy, despite the best efforts of the BOJ to create some inflation. This could mean that the central bank will resort to further easing measures later in the year, which is bearish for the yen. So there is still an expectation in the markets that the yen will continue to lose ground, as it has since late last week.
Back in the US, last week’s employment numbers were welcome news, as the US has been churning out mostly weak key releases. Unemployment Claims came in below expectations for the second straight week. The key indicator dropped from 339 thousand to 324 thousand, blowing past the estimate of 346 thousand. On Friday, Non-Farm Payrolls climbed to 165 thousand. This easily beat the estimate of 146 thousand. As well, the Unemployment Rate fell from 7.6% to 7.5%. Improving employment numbers are critical for economic growth, and the markets are hoping that the good news continues.
USD/CAD for Monday, May 6, 2013
1.0084 H: 1.0084 L: 1.0073
USD/CAD is showing little movement in Monday trading. The pair continues to face resistance at the round number of 1.01. This is a weak line, and could face pressure if the US dollar breaks out. This is followed by stronger resistance at 1.0157. On the downside, there is weak support at 1.0041. The next support level is at the all-important parity level.
Current range: 1.0041 to 1.01
Further levels in both directions:
- Below: 1.0041, 1.00, 0.9930 and 98.42
- Above: 1.01, 1.0157, 1.0229, 1.0282 and 1.0361
OANDA’s Open Position Ratio
USD/CAD ratio is not showing much movement in Monday trading. This is reflected in the pair, which is unchanged as well. Traders should continue to monitor the ratio, as an increase in activity could be an indication that we will see the pair breakout from its current drifting.
USD/CAD appears to be comfortable as it continues to trade close to the 1.01 line. The loonie has not taken advantage of a superb Canadian Building Permits release earlier in the day. However, with Canada releasing a key PMI later today, we could see some movement from the sleepy pair.
- 12:30 Canadian Building Permits. Estimate 0.7%. Actual 8.6%.
- 14:00 Canadian Ivey PMI. Estimate 58.3 points.
*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.