USD/CAD – Steady as US Unemployment Claims Sparkle

USD/CAD is steady in Thursday trading, with the pair continuing to trade in the low-1.03 range in the North American session. In economic news, US Unemployment Claims dropped sharply, but this was apparently due to technical issues in counting claims. Today’s only Canadian release, New Housing Price Index, posted a modest 0.2% gain, matching the forecast.

On Thursday, US Unemployment Claims dropped to a sizzling 292 thousand last week, well below the estimate of 332 thousand. However, a Department of Labor spokesman said the decrease was due to computer upgrades in two states, which meant that not all claims were processed. The four-week average, which is a less volatile gauge of unemployment claims, dropped to 321,000, its lowest level since 2007.

When will the Fed press the QE tapering trigger? With mixed employment numbers coming out of the US, it remains unclear what the Fed is planning to do. Unemployment Claims looked very sharp on Thursday, but other employment releases have not been as strong. Tuesday’s JOLTS Job Openings looked weak, coming in at 3.69 million, way off the estimate of 3.96 million. Last week’s Non-Farm Payrolls came in at 169 thousand, missing the estimate of 178 thousand. The Unemployment Rate dropped from 7.4% to 7.3%, but this improvement is not all that significant, given the low participation rate in the labor force. There has been talk of the Fed reducing QE as early as September, but we’re unlikely to see any action if US employment numbers don’t improve.

The Syrian crisis has taken on a new twist, as US military action, which seemed a foregone conclusion in late August, is currently on the backburner. The US and Russia are spearheading intensive efforts to come up with a diplomatic solution to the crisis. Under the proposed plan, Syria would hand over its entire arsenal of chemical weapons to the international community to be destroyed. Speaking on US television earlier in the week, President Obama said that he would delay any military action as long as a diplomatic solution was possible, but that a strike against Syria was still on the table. If the diplomatic efforts gain momentum and the crisis eases, we could see the safe-haven dollar lose ground.

In Canada, employment markets woes continues to concern the markets. Finance Minister Jim Flaherty said that the government is expecting “modest” job creation in 2013, but this may be an overly optimistic view. Manpower Canada, a prominent workforce consultancy group, stated in a fourth-quarter survey that job creation is stagnant. Manpower said that low productivity and high labor costs are weighing on the labor markets and taking a heavy toll on the Canadian economy.

 

USD/CAD for Thursday, September 12, 2013

Forex Rate Graph 21/1/13
USD/CAD September 12 at 14:00 GMT

USD/CAD 1.0332 H: 1.0336 L: 1.0306

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0158 1.0224 1.0282 1.0337 1.0442 1.0502

 

  • USD/CAD has edged higher in Thursday trading. The pair touched a low of 1.0306 late in the Asian session but has moved higher.
  • The pair is testing resistance at 1.0337. This line could fall if the US dollar posts more gains. This is followed by resistance at 1.0442.
  • USD/CAD is receiving support at 1.0282. This is followed by a support line at 1.0224. This line has held firm since mid-June.
  • Current range: 1.0282 to 1.0337

 

Further levels in both directions:

  • Below: 1.0282, 1.0224 and 1.0158 and 1.0068
  • Above 1.0337, 1.0442, 1.0502, 1.0573, 1.0652 and 1.0758

 

OANDA’s Open Positions Ratio

USD/CAD continues to point to movement towards long positions. This is reflected in the current movement of the pair, with the US dollar edging higher in Thursday trading. The ratio is currently made up of a slight majority of long positions, after a long stretch of a majority of short positions. This shift is due to the strong gains posted by the Canadian dollar in September.

USD/CAD continues to trade in the mid-1.03 range. The pair has had an uneventful day so far, and this quiet movement could continue during the North American session.

 

USD/CAD Fundamentals

  • 12:30 Canadian New Housing Price Index. Estimate 0.2%. Actual 0.2%.
  • 12:30 US Unemployment Claims. Estimate 332K. Actual 292K.
  • 12:30 US Import Prices. Estimate 0.6%. Actual 0.0%.
  • 13:00 FOMC Member William Dudley Speaks.
  • 14:30 US Natural Gas Storage. Estimate 65B.
  • 17:00 US 30-year Bond Auction.

 

*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

Market Analyst at OANDA
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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