USD/CAD – Loonie Loses Ground as Unemployment Claims Jump

The Canadian dollar has lost ground in Thursday’s North American session, following a dismal release from US Unemployment Claims earlier today. The indicator climbed to 368 thousand, a nine-week high. In other news, Core Retail Sales and Retail Sales both posted improvements in November. In Canada, the New Housing Price Index posted a weak gain of 0.1%. Later on Thursday, Bank of Canada Governor Stephen Poloz will speak at an event in Montreal.

US unemployment numbers have looked sharp in recent releases, so Thursday’s poor Unemployment Claims came as a rude surprise to the markets. The key employment indicator jumped to 368 thousand, up sharply from 298 thousand in the previous release. This was well above the estimate of 321 thousand. The weak reading may put on a damper on the Federal Reserve taking action at its December policy meeting. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper would likely boost the US dollar against the major currencies. There was better news from US retail sales data. Retail Sales rose to 0.7%, up from 0.4% in October. Core Retail Sales followed suit, climbing from 0.2% to 0.4%. Both releases beat their estimates.

Canadian inflation indicators have been sluggish, underscoring an underperforming economy with plenty of slack. This was underscored on Thursday, as the New Housing Price Index posted a paltry gain of 0.1%, falling short of the estimate of 0.2%. The index is an important gauge of inflation and activity in the housing industry.

With memories of the October government shutdown still fresh on Capitol Hill, negotiators have reached a budget agreement which is expected to get the approval of both Republicans and Democrats. The agreement removes the risk of a government shutdown in January and reduces the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty which we’ve seen in recent months.

USD/CAD for Thursday, December 12, 2013

USD/CAD December 12 at 15:25 GMT

USD/CAD 1.0646 H: 1.0654 L: 1.0638

USD/CAD Technical

• USD/CAD touched a low of 1.0561 in the European session, but has posted sharp gains since then.
• On the upside, 1.0652 has weakened as the pair trades at higher levels. Will this line fall during the North American session? This is followed by a resistance line at 1.0783.
• 1.0573 continues to provide support. This is followed by support at 1.0502, protecting the 1.05 level.
• Current range: 1.0573 to 1.0652

Further levels in both directions:

• Below: 1.0573, 1.0502, 1.0442 and 1.0337
• Above 1.0652, 1.0783, 1.0852, 1.0945 and 1.10

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed directions on Thursday, pointing to gains in long positions. This is reflected in the current movement of the pair, as the pair has moved sharply higher. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar reversing its current downward movement.

The Canadian dollar is under strong pressure following a poor US Unemployment Claims. The loonie continues to lose ground in the North American session, and we could see this downward trend continue during the day.

USD/CAD Fundamentals

• 13:30 Canadian New Housing Price Index. Estimate 0.2%. Actual 0.1%.
• 13:30 Canadian Capacity Utilization Rate. Estimate 81.1%. Actual 81.7%.
• 13:30 US Core Retail Sales. Exp. 0.2%. Actual 0.4%.
• 13:30 US Retail Sales. Exp. 0.6%. Actual 0.7%.
• 13:30 US Unemployment Claims. Exp. 321K. Actual 368K.
• 13:30 US Import Prices. Exp. -0.7%. Actual -0.6%.
• 15:00 US Business Inventories. Exp. 0.4%. Actual 0.7%.
• 15:30 US Natural Gas Storage. Exp. -85B. Actual -81B.
• 18:01 US 30-year Bond Auction.
• 18:05 Bank of Canada Governor Stephen Poloz Speaks.

*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.