USD/CAD has recorded strong gains in the Thursday session. In North American trade, the pair is trading at 1.3245, up 0.71% on the day. The US dollar has gained close to one percent this week against the loonie, after posting two straight losing weeks.
Canada, US post weak employment data
Canada posted strong employment numbers last week, as the economy created 378.2 thousand jobs in September. However, the September ADP nonfarm payrolls report was dismal, with a reading of -240.8 thousand. Investors didn’t hesitate to give a thumbs-down to the Canadian dollar, as USD/CAD has risen 0.70% on Thursday.
In the US, it was also a disappointing day on the labour front. Initial unemployment claims jumped to 898 thousand, up from 840 thousand. This was well above the estimate of 810 thousand and the highest weekly level since August. Manufacturing releases were a mix, as the Empire State Manufacturing Index slowed to 10.5, down from 17.0 beforehand. However, the Philly Fed Manufacturing Index climbed to 32.3, up sharply from 15.0 points. This is the indicator’s highest level since January.
US wholesale prices stronger than expected
After disappointing CPI data on Wednesday, there was better news from the Producers Price Index, a key inflation gauge. The headline reading edged up to 0.4%, up from 0.3% and above the forecast of 0.2%. Core PPI remained at 0.4%, above the estimate of 0.2%. Despite the positive numbers, weak domestic demand and excess capacity in the economy are likely to translate into weak inflation levels in the foreseeable future.
With USD/CAD posting sharp gains, we review the weekly support and resistance lines:
- USD/CAD is putting pressure on resistance at 1.3267. Above, there is resistance at 1.3420
- 1.3036 is providing support. This is followed by support at 1.2958
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