USD/CAD – Steady as US Employment, Manufacturing Numbers Improve

It continues to be an uneventful week for USD/CAD. Early in the Thursday North American session, as the pair is trading in the low-1.08 range. On the release front, US numbers had a good day, as Unemployment Claims and the Philly Fed Manufacturing Index improved in May and beat their estimates. There are no Canadian releases on Thursday, but the markets are keeping an eye on two major releases on Friday – Core Retail Sales and Core CPI.

There was positive economic news out of the US on Thursday, as Unemployment Claims dipped to 312 thousand last week, beating the estimate of 316 thousand. As well, the Philly Fed Manufacturing Index, which has been on the upswing for most of 2014, continued the trend and improved to 17.8 points, crushing the estimate of 14.3. This was the index’s strongest reading since last August, and points to a manufacturing sector which is expanding in order to keep up with increasing demand.

The Federal Reserve continued to trim its QE program, reducing the scheme by $10 billion, to $35 billion/month. If all goes as planned, the Fed could wind up QE in the fall. The Fed also hinted that interest rates will continue to stay low for the foreseeable future, which likely means that we won’t see any rate hikes before the first quarter of 2015. With regard to economic activity, the Fed noted that the recovery is continuing, but it reduced its forecast of economic growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent. The bottom line? There were no dramatic items in the Fed statement, with one analyst describing current Fed policy as “steady as she goes”.

In Canada, there was more good news as Wholesale Sales, an important indicator of consumer spending, jumped 1.2% in May, crushing the estimate of 0.3%. Earlier in the week, Foreign Securities Purchases posted a gain of $10.13 billion, its highest level since last May. The estimate stood at $4.27 billion. The markets are hoping the strong numbers continue on Friday, with the release of Core CPI and Core Retail Sales.

USD/CAD for Thursday, June 19, 2014

USD/CAD June 19 at 14:50 GMT

USD/CAD 1.0826 H: 1.0837 L: 1.0811

USD/CAD Technical

• 1.0852 has reverted to a resistance role as the pair has edged lower. This is a weak line which could face pressure if the US dollar rebounds. The next resistance line is at 1.0906.
• 1.0775 is the next support level. This is followed by support at 1.0706.
• Current range: 1.0775 to 1.0852

Further levels in both directions:

• Below: 1.0775, 1.0706, 1.0678 and 1.0572
• Above: 1.0852, 1.0906, 1.10 and 1.1094

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions on Thursday. This is not consistent with the pair’s movement, as US dollar has edged lower. The pair has a majority of long positions, indicative of trader bias towards the US dollar posting gains.

The Canadian dollar is steady on Thursday. The pair is almost unchanged in the North American session.

USD/CAD Fundamentals

• 12:30 US Unemployment Claims. Estimate 316K. Actual 312K.
• 14:00 US Philly Fed Manufacturing Index. Estimate 14.3 points. Actual 17.8 points.
• 14:00 US CB Leading Index. Estimate 0.6%. Actual 0.5%.
• 14:30 US Natural Gas Storage. Estimate 112B. Actual 113B.

*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.