USD/CAD – Canadian Dollar Slides as Ivey PMI Sinks

The Canadian dollar has posted sharp losses on Wednesday, as USD/CAD is trading in the mid-1.25 range in the North American session. On the release front, Canadian Ivey PMI slid to 45.4 points, well off expectations. In the US, ADP Non-Farm Employment Change fell to 213 thousand, while ISM Non-Manufacturing PMI showed little change, with a reading of 56.7 points.

It didn’t take much for the Canadian dollar to deflate. The currency enjoyed a promising start to the week, but has lost over 120 points on Wednesday, as Canadian Ivey PMI was extremely weak. The index dropped to 45.4 points, pointing to contraction for the first time in seven months. The markets had expected a solid reading of 53.8 points. Earlier in the week, Canadian inflation numbers posted declines in the December readings. RMPI plunged 7.6%, but this was enough to beat the forecast of -8.8%. IPPI followed suit with a reading of -1.6%, lower than the estimate of -0.5%.

In the US, ADP Non-Farm Employment Change was well off expectations, falling to 213 thousand. The estimate stood at 224 thousand. The markets are bracing for more bad news, as the estimates for Unemployment Claims and the official Nonfarm Employment Change also call for weaker readings. If the forecasts prove correct that the labor market has started off 2015 on a weak note, we could see the US dollar lose ground.

USD/CAD for Wednesday, February 4, 2015

USD/CAD February 4 at 16:25 GMT

USD/CAD 1.2552 H: 1.2590 L: 1.2390

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2387 1.2469 1.2543 1.2680 1.2761 1.2950

 

  • USD/CAD was flat in the Asian session. The pair has posted gains in European and North American sessions.
  • 1.2543 has reverted to a support role as the pair has risen sharply. 1.2469 is stronger.
  • 1.2680 is a strong resistance line.
  • Current range: 1.2543 to 1.2680

Further levels in both directions:

  • Below: 1.2543, 1.2469, 1.2387, 1.2261 and 1.2190
  • Above: 1.2680, 1.2761, 1.2950 and 1.3063

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions on Wednesday, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as the Canadian dollar has posted sharp losses. The ratio is an even split between long and short positions, indicative of a lack of trader bias as to what direction the pair will take next.

USD/CAD Fundamentals

  • 13:15 US ADP Non-Farm Employment Change. Estimate 224K. Actual 213K.
  • 14:45 US Final Services PMI. Estimate 54.3 points.
  • 15:00 US ISM Non-Manufacturing PMI. Estimate 56.6 points. Actual 56.7 points.
  • 15:30 Canadian Ivey PMI. Estimate 53.8 points. Actual 45.4 points.
  • 15:30 US Crude Oil Inventories. Estimate 4.0M. Actual 6.3M.

*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

Currency Analyst at Market Pulse
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.