USD/CAD: Steady As US Employment Numbers Shine

USD/CAD has edged lower on Thursday, as the pair trades in the mid-1.06 range early in the North American session. On the release front, Nonfarm Payrolls jumped last month, and the Unemployment Rate dropped to its lowest level in almost six years. US Trade Balance improved slightly last month. In Canada, the trade deficit narrowed, beating the estimate.

In the US, it’s been an excellent week for employment data. Nonfarm Payrolls led the way on Thursday as the key indicator bounced back in June with a strong release, coming in at 288 thousand new jobs. This crushed the estimate of 214 thousand. Unemployment Claims was steady at 315 thousand, almost replicating the estimate of 314 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and after the Fourth of July holiday, the markets will be closely attuned to remarks from Federal Reserve policymakers.

Unlike its southern neighbor, Canada’s releases have not impressed the markets. Trade Balance posted another decline, coming in at -$0.2 billion. This was an improvement from last month and did beat the estimate, but the indicator continues to struggle. GDP, the primary gauge of economic activity, had another weak outing in May. The key indicator, which is released each month, came in at just 0.1%, unchanged from a month earlier. This was shy of the estimate of 0.2%, and points to weak economic activity. The weak GDP comes on the heels of weak inflation numbers from Canada’s manufacturing industry. Still, the Canadian dollar has managed to hold its own against its US counterpart, despite strong US numbers of  late, notably employment and housing data.

USD/CAD for Thursday, July 3, 2014

USD/CAD July 3 at 12:10 GMT

USD/CAD 1.0648 H: 1.0680 L: 1.0643

USD/CAD Technical

• USD/CAD was stable in the Asian session. The pair pushed higher in the European session, but has surrendered these gains early in North American trading.
• On the upside, 1.0678 is under strong pressure. 1.0775 is stronger.
• 1.0572 is providing the pair with strong support. This is followed by support at 1.0414, which has held firm since October 2013.
• Current range: 1.0572 to 1.0678

Further levels in both directions:

• Below: 1.0572, 1.0414, 1.0271 and 1.0182
• Above: 1.0678, 1.0706, 1.0775 and 1.0852

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in Thursday trade. This is not consistent with the movement of the pair, as the Canadian dollar has posted slight gains. The ratio has a majority of long positions, indicative of trader bias towards the US dollar reversing directions and gaining ground.

USD/CAD Fundamentals

• 11:30 US Challenger Job Cuts. Actual -20.2%.
• 12:30 Canadian Trade Balance. Estimate -0.3B. Actual -0.2B.
• 12:30 US Nonfarm Employment Change. Estimate 214K. Actual 288K.
• 12:30 US Unemployment Claims. Estimate 314K. Actual 315K.
• 12:30 US Unemployment Rate. Estimate 6.3%. Actual 6.1%.
• 12:30 US Trade Balance. Estimate -45.1B. Actual -44.4B.
• 12:30 US Average Hourly Earnings. Estimate 0.2%. Actual 0.2%.
• 13:45 US Final Services PMI. Estimate 61.1 points. Actual 61.0 points.
• 14:00 US ISM Non-Manufacturing PMI. Estimate 56.2 points. Actual 56.0 points.
• 14:30 US Natural Gas Storage. Estimate 100B. Actual 100B.

*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.