USD/CAD – Weak Canadian Dollar Flirting With 1.10

The Canadian dollar is steady on Wednesday, as USD/CAD continues to trade slightly below the 1.10 line, close to 4-month lows. The loonie has lost about one cent this week, as the surging US dollar continues to steamroll over its major rivals. On the release front, there were no major releases out of the US or Canada. On Thursday, we’ll get a look at US Unemployment Claims, a key release which could move the markets.

US numbers continue to point to a deepening recovery, and the Federal Reserve is expected to trim QE next week and wind up the scheme in October. The markets are expecting an interest rate hike by mid-2015, and will be looking for hints from Fed policymakers as to the timing of a rate hike. At the same time, the US labor market is showing signs of trouble. JOLTS Job Openings was unchanged in August at 4.67 million, short of the estimate of 4.72 million. On Friday, the eagerly-anticipated Nonfarm Employment Change crashed to 142 thousand, its lowest gain since January. This surprised the markets, which had expected a gain of 226 thousand. The disappointing release follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims.

Weakness in the Canadian job sector was underscored on Friday, as Employment Change surprised with a decline of 11.0 thousand in August, the second decline in three readings. The markets had anticipated a gain of 10.3 thousand. As expected, the BOC held interest rates at 1.0% last week. The rates have remained steady for 4 years, the longest lack of movement since the 1950s. The central bank remains in a neutral stance, noting that there is slack in the economy. A rate move is unlikely before 2015, and whether rates move up or down will depend on the strength of the economy and the employment outlook.

USD/CAD for Wednesday, September 10, 2014

USD/CAD September 10 at 14:35 GMT

USD/CAD 1.0977 H: 1.1014 L: 1.0958

USD/CAD Technical

• USD/CAD has been uneventful. The pair broke above the 1.10 in the European session but then retracted.
•  1.0961 is an immediate support line. Will the pair break through during the day? 1.0852 is next.
• 1.1004 is back in a resistance role, but is a weak line. 1.1124 is stronger.
• Current range: 1.1004 to 1.1124

Further levels in both directions:

• Below: 1.0961, 1.0852, 1.0775, 1.0678 and 1.0588
• Above: 1.1004, 1.1124, 1.1278, 1.1414 and 1.1669

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions on Wednesday, continuing the movement which has marked the ratio this week. This is not consistent with the movement of the pair, which has posted small losses. The ratio has a slight majority of long positions, indicating a weak trader bias towards the US dollar continuing to move higher.

USD/CAD Fundamentals

• 12:30 Canadian Capacity Utilization Rate. Estimate 82.8%. Actual 82.7%.
• 14:00 US Wholesale Inventories. Estimate 0.5%. Actual 0.1%.
• 14:30 US Crude Oil Inventories. Estimate -1.0M. Actual -0.1M.
• 17:01 US 10-year Bond Auction.

* 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.