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USD/CAD – US Dollar Edges Higher, Crosses 1.02 Line

USD/CAD has edged higher on Tuesday, and the pair is once again in 1.02 territory. The pair is trading in the 1.0220 range early in the North American session. It could turn out to be another quiet day, as there are no Canadian releases, and only two minor events in the US. NFIB Small Business Index jumped to 94.4 points, a twelve-month high. The indicator has risen nicely in 2013, as it began the year in the 88-point range. Wholesale Inventories will be released later on Tuesday.

Canadian key releases looked sharp last week, as Ivey PMI jumped from 52.2 to 63.1 points, easily surpassing the estimate of 55.3 points. This was followed by an outstanding Employment Change on Friday. The indicator rocketed from 12.5 thousand to 95.0 thousand, its best performance since May 2010. The unemployment rate dipped from 7.2% to 7.1%. The loonie took full advantage of the sharp numbers, gaining close to two cents against the US dollar.

Will the Fed pull the trigger on QE? Much will depend on US employment numbers, which were a mix of good and less good last week. ADP Non-Farm Payrolls slipped badly, as the key employment indicator missed the estimate for the third consecutive month. The indicator posted a reading of 135 thousand, well off the forecast of 171 thousand. Unemployment Claims managed to meet the estimate, but the market reaction was lukewarm. Non-Farm Payrolls was strong, climbing from 165 thousand to 175 thousand. This was above the market forecast of 167 thousand. However, the Unemployment Rate rose edged higher to 7.6%, above the forecast of 7.5%. With speculation growing that the Fed could scale back QE in the next few months, employment figures have taken on added significance. However, the Fed may decide to hold a steady course if the employment picture remains cloudy.

Meanwhile, there was some good news for the US from the S&P ratings agency on Monday, as the well-respected firm revised the US sovereign credit rating from negative to stable. This is an important vote of confidence in the US economy, and means that there is less than a 1 in 3 chance of another downgrade in the next two years. S&P noted that a key factor in its revision was the agreement reached in the US Congress which averted the fiscal cliff crisis, which would have led to $600 billion in automatic tax increases and spending cuts and could have pushed the fragile US economy into recession. In 2011, S&P cut the US credit rating from AAA to AA, and the threat of another downgrade has been a concern of the markets. This news will likely improve market sentiment and could give a boost to the US dollar.


USD/CAD for Tuesday, June 11, 2013

Forex Rate Graph 21/1/13
USD/CAD June 11 at 13:30 GMT

USD/CAD 1.0222 H: 1.0252 L: 1.0177


USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0058 1.0100 1.0157 1.0229 1.0282 1.0337


USD/CAD has edged higher, as the proximate resistance and support lines remain in place (R1 and S1 above). USD/CAD continues to receive support at 1.0157. This line has strengthened as the pair trades above the 1.02 line. The next support level is at the round number of 1.01. On the upside, the pair is testing resistance at 1.0229. This line was breached in the European session and could see more action during the day. This is followed by strong resistance at 1.0282.


Further levels in both directions:


OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in Tuesday trading. This is reflected in the pair’s current movement, as the pair has not shown much net movement. The ratio continues to be closely split, with short positions comprising a slight majority of open positions.

USD/CAD is trading quietly. With no major releases out of Canada or the US on Tuesday, we could see the pair continue to trade close to the 1.02 level.

USD/CAD Fundamentals


*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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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