USD/CAD continues to test the 1.04 line on Thursday. The pair is trading just below this key level in the North American session. In economic news, US Unemployment Claims soared, hitting their highest level since April. Canada continues to post weak inflation indicators, as the New Housing Price Index rose just 0.1% in September. In the US, Unemployment Claims was a huge disappointment, soaring to its highest level since April. In other news, Janet Yellen was nominated by President Obama to head the Federal Reserve. As well, the FOMC Meeting minutes indicated that most policymakers favor tapering QE before the end of the year.
As expected, President Obama nominated Susan Yellen to head the Federal Reserve. Yellen will take over from Bernard Bernanke, who is due to retire early next year. Yellen, who currently serves as Fed vice-chairwoman, became the leading candidate after former Treasury Secretary Lawrence Summers withdrew his candidacy. Yellen is considered dovish in stance and has supported Bernanke in three rounds of QE increases. Her nomination must be confirmed by the Senate, but she is expected to be widely endorsed for her new post.
The Federal Reserve policy meeting minutes, a highly anticipated event, was released on Wednesday. At the meeting, the Fed surprised the markets by opting to hold the course with its bond-purchasing program, which currently runs at $85 billion/mth. The minutes stated that the decision not to begin tapering was a “close call”. This has increased speculation that we could see tapering before the end of the year. However, the monkey wrench in all this is the fiscal uncertainty from shutdown and looming debt crisis. As well, the Fed is heavily dependent on key releases such as Non-Farm Payrolls, which have been suspended to the shutdown. So it’s unlikely that we’ll see any moves to reduce QE before December at the earliest.
As if Congress doesn’t have its plate full with the budget deadlock and shutdown, a debt ceiling crisis and could unleash a devastating financial crisis. The US has a debt worth $16.7 trillion, and the country will run out of funds to service the debt by October 17, unless Congress authorizes raising the debt ceiling. Otherwise, the US could potentially default on its obligations, which could cause chaos in the domestic and international markets. There is a lot of bad blood between the Republicans and Democrats over the shutdown, and this will undoubtedly complicate negotiations over the debt ceiling. There are signs of some progress, with talks between the sides focusing on the possibility of a short-term increase in the debt limit, which would avoid a default, for now.
USD/CAD for Thursday, October 10, 2013
USD/CAD October 10 at 13:45 GMT
USD/CAD 1.0393 H: 1.0419 L: 1.0392
- USD/CAD has steadied in Thursday trading. The pair broke above the 1.04 line in the European session, but has since edged lower.
- The pair continues to face resistance line at 1.0442. This is followed by resistance at 1.0502. This line has remained intact since early September.
- USD/CAD is receiving support at 1.0337. This is followed by a support level at 1.0282.
- Current range: 1.0337 to 1.0442
Further levels in both directions:
- Below: 1.0337, 1.0224, 1.0158 and 1.0068
- Above 1.0442, 1.0502, 1.0573 and 1.0652
OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged in Thursday trading. This is reflected in the current movement of the pair, which continues to stay close to the 1.04 line. The ratio is to be made up of a majority of long positions, indicative of a trader bias towards the US dollar moving higher.
USD/CAD remains close to the 1.04 line. The rise of the pair has been blunted by a weak Unemployment Claims release, so we could see the pair stay close to this level during the day.
- 12:00 US Treasury Secretary Jack Lew Speaks. Lew will testify on the debt limit before the Senate Finance Committee.
- 12:30 US Unemployment Claims. Estimate 307K. Actual 374K.
- 12:30 Canadian NHPI. Estimate 0.3%. Actual 0.1%.
- 13:45 US FOMC Member James Bullard Speaks.
- 14:30 US Natural Gas Storage. Estimate 96B.
- 17:01 US 30-year Bond Auction.
- 16:45 US FOMC Member Daniel Tarullo Speaks.
*Key releases are highlighted in bold
*All release times are GMT
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