USD/CAD – Steady as Markets Await Canadian, US Job Reports

The Canadian dollar posted strong gains on Thursday, as USD/CAD dropped about 140 points. USD/CAD is steady on Friday, trading in the mid-1.24 range in the European session. We could see some volatility from the pair later in the day, as both Canada and the US release key employment numbers.

In the US, the markets are expecting a weak Nonfarm Employment report for January, with an estimate of 236 thousand. The US will also release the unemployment rate, which is expected to remain at 5.6%. After two straight declines, Canadian Employment Change is expected to show a gain of 4.7 thousand for January. The unemployment rate is expected to edge up to 6.7%. Building Permits, a volatile indicator, is expected to rebound with a strong gain of 4.8%.

Employment readings out of the US this week have not impressed. ADP Non-Farm Employment Change was well off expectations, falling to 213 thousand. The estimate stood at 224 thousand. Unemployment Claims rose to 278 thousand last week, although this did beat the forecast of 287 thousand. If the official Nonfarm Employment Change does soften as is expected, the US dollar could lose some ground.

The Canadian dollar posted strong gains on Thursday, as the currency reacted positively as the trade deficit remained unchanged at C$-0.6 billion. The markets had expected a much larger deficit of C$-1.2 billion. The loonie has recovered from Wednesday’s losses, which followed a dismal Ivey PMI. 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.

USD/CAD for Friday, February 6, 2015

USD/CAD February 6 at 10:10 GMT

USD/CAD 1.2440 H: 1.2461 L: 1.2429

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2190 1.2261 1.2387 1.2469 1.2543 1.2680

 

  • USD/CAD has been flat in the Asian and European sessions.
  • 1.2469 remains a weak resistance line. 1.2543 is stronger.
  • 1.2387 is an immediate support level.
  • Current range: 1.2387 to 1.2469

Further levels in both directions:

  • Below: 1.2387, 1.2261, 1.2190, 1.2096 and 1.1975
  • Above: 1.2469, 1.2543, 1.2680, 1.2761 and 1.2950

 

OANDA’s Open Positions Ratio

USD/CAD ratio is showing gains in long positions on Friday. This is not consistent with the lack of movement currently displayed by the pair. The ratio is close to a 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

  • 13:30 Canadian Building Permits. Estimate 4.8%.
  • 13:30 Canadian Employment Change. Estimate 4.7K.
  • 13:30 Canadian Unemployment Rate. Estimate 6.7%.
  • 13:30 US Nonfarm Employment Change. Estimate 236K.
  • 13:30 US Unemployment Rate. Estimate 5.6%.
  • 13:30 US Average Hourly Earnings. Estimate 0.3%.
  • 16:45 US FOMC Member Dennis Lockhart Speaks.
  • 20:00 US Consumer Credit. Estimate 15.1B.

*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.