USD/CAD – Almost Unchanged Ahead of US Major Releases

USD/CAD is showing little activity in Friday trading, as the pair continues to trade in the mid-1.03 range in the European session. Taking a look at economic news, US Unemployment Claims dropped sharply, but technical problems resulted in some claims not being processed. After only one major US release this week, the markets will have plenty of data to sift through on Friday, with four key events on Friday – Core Retail Sales, Retail Sales, PPI, and UoM Consumer Sentiment. Today’s sole Canadian release is Capacity Utilization Rate.

US Unemployment Claims pointed to a sharp decline for the August release. However, a Department of Labor spokesman said that the drop was due to computer upgrades in two states, which meant that not all claims were processed. Even so, unemployment claims are looking positive. The four-week average, which is a less volatile gauge of unemployment claims, dropped to 321,000, its lowest level since 2007. If employment data continues to improve, we could see the Fed pull the tapering trigger sooner rather than later.

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.

The Canadian unemployment rate has been lower than that of its southern neighbor since October 2008, but the differential has been narrowing. In August, Canada’s unemployment rate stood at 7.1%, with the US posting a 7.3% rate. Experts expect the US unemployment rate to finally fall below the Canadian one in 2014, as the US economy continues to pick up speed. This shift could hurt the Canadian dollar, which is having a tough time keeping pace with its US counterpart.

 

USD/CAD for Friday, September 13, 2013

Forex Rate Graph 21/1/13
USD/CAD September 13 at 11:40 GMT

USD/CAD 1.0338 H: 1.0347 L: 1.0323

 

USD/CAD Technical

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

 

  • USD/CAD is showing little movement in Friday trading, trading in the mid-1.03 range.
  • The pair is testing resistance at 1.0337. This line could fall if the Canadian dollar loses ground. 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, a trend we have seen throughout the week. This is not reflected in the current movement of the pair, which is trading in a very narrow range. The ratio is currently made up of a strong 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. This has resulted in the covering of numerous short positions, which has led to a greater percentage of long positions.

USD/CAD continues to trade in the mid-1.03 range. We could see some volatility from the pair later in the day, as the US releases a host of key releases.

 

USD/CAD Fundamentals

  • 12:30 Canadian Capacity Utilization Rate. Estimate 81.3%.
  • 12:30 US Core Retail Sales. Estimate 0.3%.
  • 12:30 US Retail Sales. Estimate 0.5%.
  • 12:30 US Core PPI. Estimate 0.2%.
  • 12:30 US PPI. Estimate 0.2%.
  • 13:55 US Preliminary UoM Consumer Sentiment. Estimate 82.6 points.
  • 13:55 US Preliminary UoM Inflation Expectations.
  • 14:00 US Business Inventories. Estimate 0.4%.

 

*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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