USD/CAD – Almost Unchanged As Unemployment Claims Remain Steady

USD/CAD is virtually unchanged in Thursday trading. Early in the North American session, the pair is trading in the low-1.03 range. In economic news, US Unemployment Claims was up slightly from the previous reading, but still beat the estimate. ISM Non-Manufacturing PMI will be released later today. The government shutdown continues as Congress has been unable to reach an agreement to end the budget stalemate. There are no Canadian releases on Thursday.

The US shutdown continues to grip the country, as the battle in Congress continues over the federal budget. With the government lacking funds to operate, it has been forced to close non-essential services and send almost a million government workers home. The Republicans and Democrats are entrenched in their positions, but public resentment may force the politicians to get their act together quickly. If things are resolved sometime this week, it will have been more of a nuisance than a crisis. However, a much more serious crisis could occur in two weeks if Congress doesn’t reach an agreement on raising the debt ceiling. If that happens, the Treasury would be unable to pay all of its bills, and the economic fallout could be tremendous. With all the bad blood between the Democrats and Republicans, reaching an agreement on the debt ceiling could prove a difficult task.

What does the US shutdown mean for Canada? A prolonged shutdown could put a dent in US growth, and this would of course be bad news for the Canadian economy, which is heavily dependent on its neighbor to the south. So we can expect the Canadian dollar to remain under strong pressure from the US currency, as all signs point to the shutdown dragging on into next week.

The Federal Reserve surprised the markets in September when it didn’t taper QE, and the next dates to circle are October 29- 30, when the Fed holds its next policy meeting. Employment data will be an important factor in the Fed’s decision later this month. This week’s employment numbers were mixed. ADP Non-Farm Employment Change did not impress in September. The indicator dropped from 176 thousand in August to 166 thousand in September, a four-month low. The estimate stood at 177 thousand. There was better news from Unemployment Claims, as the key indicator rose slightly to 308 thousand, but beat the forecast of 315 thousand. Due to the shutdown, Friday’s Non-Farm Employment Change release has been cancelled.

USD/CAD for Thursday, October 3, 2013

USD/CAD 1.0316 H: 1.0340 L: 1.0314

USD/CAD Technical

• USD/CAD is showing little movement on Thursday, as the pair trades in the low-1.03 range.
• The pair continues to test resistance at 1.0337. This line has had a busy week and this could continue as the pair trades in a narrow range. This is followed by a strong resistance line at 1.0442.
• The pair is receiving support at 1.0282. This is followed by a stronger support line at 1.0224.
• Current range: 1.0282 to 1.0337

Further levels in both directions:

• Below: 1.0282, 1.0224, 1.0158 and 1.0068
• Above 1.0337, 1.0442, 1.0502, 1.0573, 1.0652 and 1.0758

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to movement towards short positions in Thursday trading. This is reflected in the current movement of the pair, as the Canadian dollar has posted very modest gains. The ratio continues to be made up of a majority of long positions, indicative of a trader bias towards the US dollar moving higher.

USD/CAD is trading quietly, staying close to the 1.03 level. The pair could continue to drift, unless today’s ISM Non-Manufacturing PMI surprises the markets.

USD/CAD Fundamentals

• 11:30 US Challenger Job Cuts.
• 12:30 US Unemployment Claims. Estimate 315K. Actual 308K.
• 14:00 US ISM Non-Manufacturing PMI. Estimate 57.2 points.
• 14:30 US Natural Gas Storage. Estimate 96B.
• 17:30 US FOMC Member Jerome Powell Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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