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USD/CAD: Greenback Breaks Above 1.07 on Dismal Canadian Employment Data

The Canadian dollar has posted losses on Friday, as the pair trades above the 1.07 line early in the North American session. On the release front, Canadian Employment Change posted a sharp loss, while Unemployment Change edged higher. In the US, the sole release on the schedule is the Federal Budget Balance, a minor event.

Friday was a bad day for Canadian employment numbers. Employment Change, one of the most important indicators, came in at -9.4 thousand, shocking the markets which had anticipated a strong gain of 20.7 thousand. Unemployment Rate disappointed, as the rate rose to 7.1%, up from 7.0% which was the market estimate. This is the highest unemployment rate we’ve seen in 2014. The weak job numbers have pushed USD/CAD above the 1.07 level, marking a two-week high for the pair.

Canadian inflation numbers continue to stumble, pointing to an underperforming economy. New Housing Price Index gained just 0.1% last month, its weakest reading since June. This fell short of the estimate of 0.3%, which is the highest level the indicator has managed to reach in 2014. Meanwhile, Canadian Housing Starts enjoyed an excellent June, coming in at 198 thousand, which was unchanged from the previous reading. This beat the estimate of 191 thousand, and marked the third straight month that the key indicator has surpassed the estimate. The indicator has surpassed the 190 thousand level in three of the past four releases, pointing to strong growth in the construction sector.

In the US, Unemployment Claims dropped, as employment data continues to impress. The key indicator dropped to 304 thousand, well below the estimate of 316 thousand. Employment numbers for June have looked sharp, led by a jump in Nonfarm Payrolls and a drop in the unemployment rate. The strong employment numbers have increased speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be under the market microscope.

The Federal Reserve minutes did not shed much light on when the Fed plans to raise interest rates, but policymakers did agree to wind up the QE scheme by October. The asset purchase program flooded the economy with over $2 trillion, and the Fed has been steadily reducing the program since last December. Winding down QE will require several more tapers by the Fed, but that shouldn’t pose a problem, given the solid employment data the economy has been churning out.


USD/CAD for Friday, July 11, 2014

USD/CAD July 11 at 13:55 GMT

USD/CAD 1.0703 H: 1.0711 L: 1.0631


USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0414 1.0572 1.0678 1.0775 1.0852 1.0961


Further levels in both directions:


OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions in Friday trade. This is not consistent with the movement of the pair, as the Canadian dollar has lost ground against the greenback. The ratio has a substantial majority of long positions, indicative of strong trader bias towards the US dollar continuing to gain ground.


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]

Market Analyst at OANDA [5]
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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