USD/CAD – Loonie struggling above 1.05 Despite Strong Canadian Construction Data

The US dollar continues to look strong against its Canadian counterpart. USD/CAD is trading in the mid-1.05 range, as the North American markets have opened on Monday. The US dollar got a boost on Friday, as Non-Farm Payrolls was very strong. Canadian employment data was lukewarm, as Employment Change posted a small decline but managed to beat the estimate. Taking a look at Monday’s releases, Canadian Building Permits posted a gain of 4.5%, well above expectations. The Bank of Canada will release its quarterly BOC Business Outlook Survey later in the day. In the US, it’s a quiet start to the week, with only one minor release on Monday.

Friday saw the release of employment data from both Canada and the US. After a spectacular June reading, Canadian Employment Change fell back to earth and posted a small decline of -0.4 thousand. This was good enough to beat the estimate of -4.2 thousand. The unemployment rate remained unchanged at 7.1%. However, Ivey PMI was a big disappointment, falling from 63.1 points to 55.3 points. This was way off the estimate of 59.6 points. In the US, the numbers were much stronger. Non-Farm Payrolls hit a four-month high, rising to 200 thousand new jobs. This easily beat the estimate of 163 thousand. The unemployment rate remained pegged at 7.6%, a notch above the estimate of 7.5%.

Over in Europe, Eurozone financial ministers are meeting in Brussels on Monday, and will be discussing whether to transfer the next installment of aid to Athens. Eurozone officials have expressed dissatisfaction with the lack of progress by the Greek government in implementing the bailout conditions, including budget cut shortfalls and cuts to the bloated public service. The next tranche of bailout funds amounts to EUR 8.1 billion, but these funds will not be delivered before the troika gives the go-ahead. The Eurogroup could decide to transfer smaller installments rather than the entire 8.1 billion, with each portion conditional on Greece meeting specific milestones in return for more aid.

USD/CAD for Monday, July 8, 2013

USD/CAD 1.0548 H: 1.0585 L: 1.0547

USD/CAD Technical

USD/CAD has edged lower in Monday trading. On the downside, the pair is receiving support at 1.0502, which is protecting the 1.05 level. This is followed by a stronger support level at 1.0442. The pair faces resistance at 1.0573. This line could face more pressure if the US dollar pushes higher. The next resistance line is at 1.0652.

• Current range: 1.0502 to 1.0573

Further levels in both directions:

• Below: 1.0502, 1.0442, 1.0337, 1.0282, 1.0229 and 1.0157
• Above: 1.0573, 1.0652, 1.0705, 1.0780 and 1.0853

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to movement towards long positions in the Monday session. This is not currently reflected in what we are seeing from the pair, as the Canadian dollar has edged higher. Short positions continue to enjoy a substantial majority of the open positions, indicating a strong trader bias towards the loonie moving higher.

USD/CAD has edged lower, but remains high, trading in the mid-1.05 range. The Canadian dollar has not taken advantage of a strong Building Permits release, and we could see the pair trade quietly over the course of the day.

USD/CAD Fundamentals

• 12:30 Canadian Building Permits. Estimate 2.6%.  Actual 4.5%.
• 19:00 US Consumer Credit. Estimate 13.2B.  

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