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USD/CAD – Loonie Under Pressure As US Employment Numbers Slide

The Canadian dollar is under pressure in Wednesday trading, as USD/CAD has pushed above the 1.11 level early in the North American session. In economic releases, Canadian Building Permits posted another sharp decline and came in well below the estimate. Things weren’t much better on the US employment front, as ADP Employment Change dropped sharply, hitting a three-month low. ISM Non-Manufacturing PMI improved in January and beat the estimate.

Canadian Building Permits continues to slide, posting a decline of 4.1% in January. The markets had expected a strong gain of 2.3%. This decline follows another sharp drop of 6.7% a month earlier, indicating trouble in the critical construction industry. In the US, ADP Non-Farm Employment took a hit, sliding to 175 thousand, compared to 238 thousand a month earlier. This was well shy of the estimate of 191 thousand. Is the ADP release a prelude to bad news from the official Non-Farm Payrolls report on Friday? If the NFP falters as well, the Fed could delay its next QE taper and the fallout from such a negative message could hurt the US dollar.

The Canadian dollar is happy to say goodbye to the month of January, as the currency tumbled almost five cents against the US dollar. The month ended with a disappointing GDP release, with a gain of just 0.2%. February has started off well, as the loonie moved higher on Monday, thanks to some solid inflation numbers. The Raw Materials Price Index bounced back from a sharp decline in December, posting a respectable gain of 1.7% in January. This was slightly short of the estimate of 1.9%. The Industrial Product Price Index followed suit with a 0.7% gain, marking a ten-month high. The strong readings are welcome news, as inflation has been at persistently low levels, indicating an underperforming economy.

 

USD/CAD for Wednesday, February 5, 2014

Forex Rate Graph 21/1/13

USD/CAD February 5 at 15:00 GMT

USD/CAD 1.1107 H: 1.1116 L: 1.1037

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0906 1.1000 1.1094 1.1177 1.1319 1.1496

 

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in Wednesday trading. This is consistent with what we are seeing from the pair, as the Canadian dollar is holding its own against the US currency. The ratio continues to be made up of a majority of short positions, indicating a trader bias towards the Canadian dollar moving upwards.

USD/CAD remains at high levels, trading above the 1.111 level. The US dollar is pushing higher in the North American session, as the Canadian dollar remains under pressure.

 

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]

Currency Analyst at Market Pulse [5]
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

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