USD/ CAD – Canadian Ivey PMI Sparkles

USD/CAD continues to trade quietly, as the pair trades in the mid-1.03 level early in the North American session on Thursday. The pair has settled down after strong volatility to start the week. In economic news, there are key releases out of both Canada and the US today. Canadian Ivey PMI surprised the markets with a very strong reading. In Ottawa, incoming Bank of Canada Governor Stephen Poloz addresses the House of Commons Standing Committee on Finance. In the US, Unemployment Claims rebounded after a poor outing last week, and was very close to the estimate.

The naysayers have been quite vocal lately about the Canadian economy, but there was excellent news earlier on Thursday, as Ivey PMI shot higher. The key index jumped from 52.2 to 63.1 points, blowing past the estimate of 55.3 points. This was the best showing by the index since March 2012. Ivey PMI is noted for its sharps rises and drops, which makes accurate predictions a tricky task. The markets will be hoping for more good news on Friday, as Canada releases the Unemployment Rate and Employment Change.

Which way is the US economy headed? The US continues to post some weak numbers, and on Wednesday it was the turn of ADP Non-Farm Payrolls. The key indicator has struggled, and has now missed the estimate for three consecutive releases. The indicator came in at 135 thousand, well off the forecast of 171 thousand. However, Unemployment Claims bounced back, posting a reading of 346 thousand, very close to the estimate of 345 thousand. We’ll see some more key employment numbers on Friday, as the US releases the Unemployment Rate and Non-Farm Payrolls.

Although the US Federal Reserve hasn’t made any changes so far, Fed policymakers, including Fed Chair Bernanke, continue to hint that QE could be scaled back in the next few months. With the US continuing to alternate between good and bad economic releases, the Fed may continue to hold off on any changes to QE before it is convinced that the US economy is improving. The Fed has repeatedly stated that it wants to see an improvement in the labor picture before taking any action, so this week’s employment releases could play a major role in what action, if any, the Fed takes with regard to QE.

USD/CAD for Thursday, June 6, 2013

USD/CAD 1.0352 H: 1.0367 L: 1.0308

USD/CAD Technical

USD/CAD continues to show little movement on Thursday. The pair is staying very close to the 1.0350 level as the proximate support and resistance lines (S1 and R1 above) remain intact. USD/CAD continues to receiving weak support at 1.0337. The line has been under pressure, but has managed to hold firm for now.  The next support level is at 1.0282. On the upside, the pair faces resistance at 1.0442. This line has strengthened as the pair trades at lower levels. This is followed by resistance just above the 1.05 level, at 1.0502.

• Current range: 1.0337 to 1.0442

Further levels in both directions:

• Below: 1.0337, 1.0282, 1.0229, 1.0157 and 1.01
• Above: 1.0442, 1.0502, 1.0658 and 1.0758

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in Thursday’s session. This is reflected in what we are seeing in the pair, as USD/CAD has been very quiet. Short positions continue to enjoy a substantial majority, indicating that a strong bias that the Canadian dollar will improve against the US currency.

USD/CAD continues to trade quietly in the mid-1.03 range. The pair has not reacted so far to strong US employment numbers and a superb Canadian Ivey PMI release. The Thursday session could remain uneventful, but Friday may be a different story, as both Canada and the US release key employment numbers.

USD/CAD Fundamentals

• 12:45 Bank of Canada Governor Stephen Poloz Speaks
• 14:00 Canadian Ivey PMI. Estimate 55.3 points. Actual 63.1 points.
• 11:30 US Challenger Job Cuts.
• 12:30 US Unemployment Claims. Exp. 345K. Actual 346K.
• 14:30 US Natural Gas Storage. Exp. 101B.

*Key releases are highlighted in bold

*All release times are GMT

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