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USD/CAD – Loonie Improves on Positive Canadian Sales Data

The Canadian dollar has posted gains on Friday, as USD/CAD has dipped below the 1.09 line late in the European session. On the release front, both Canada and the US released key data. Canadian Manufacturing Sales posted a gain of 0.6% in July. In the US, PPI showed a paltry gain of 0.1%, while the Empire State Manufacturing Index weakened, coming in at 14.7 points. We’ll get a look at US consumer sentiment data later in the day.

Canadian Manufacturing Sales, a key event, softened in July, with a gain of 0.6%, compared to 1.6% last month. However, the reading did beat the estimate of 0.5%. The Canadian dollar has responded by hitting its highest level in two weeks, as USD/CAD has dropped into 1.08 territory. Will the pair’s momentum continue into the North American session?

With the US continuing to suffer from low inflation levels, markets expectations have been low for key inflation indicators. On Friday, PPI, the primary gauge of inflation in the manufacturing sector, slipped to 0.1%, down from 0.4% a month earlier. This matched the estimate. Weak inflation is one reason why the Federal Reserve is not in a rush to raise interest rates, as low inflation points to slack in the economy. On the manufacturing front, the Empire State Manufacturing Index plunged to 14.3 points, down from 23.6 points in the previous release. This marked a three-month low and was well of the estimate of 20.3 points.

On Thursday, US Unemployment Claims came in higher than expected. The indicator climbed to 311 thousand, marking a six-week high. The estimate stood at 307 thousand. Employment indicators are being closely scrutinized by analysts, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate increase is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a move by the Fed. Earlier in the week, JOLTS Job Openings hit its highest level in 13 years, although it too missed expectations.

 

USD/CAD for Friday, August 15, 2014

USD/CAD August 15 at 12:35 GMT

USD/CAD 1.0904 H: 1.0908 L: 1.0888

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0678 1.0775 1.0852 1.0961 1.1004 1.1124

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions in Friday trade. This is consistent with the pair’s movement, as the Canadian dollar has posted small gains. The ratio has a small majority of short positions, indicative of slight trader bias towards the Canadian dollar moving higher.

 

USD/CAD Fundamentals

* Key releases are in highlighted 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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