USD/CAD – Loonie Drops As Unemployment Claims Shine

USD/CAD has moved higher in Thursday trading as the pair trades just shy of the 1.05 line. The US dollar moved higher as Unemployment Claims dropped to a seven-week low. PPI matched the forecast with a slight decline, while the Philly Fed Manufacturing Index plunged to a six-month low. There are no Canadian releases on Thursday.

It was another busy day for US key releases. Unemployment Claims looked sharp, dropping to 323 thousand, compared to 339 thousand in the previous release. This was well below the estimate of 339 thousand. Inflation continues to look sluggish, as the Producer’s Price Index declined by 0.2%, the indicator’s second straight decline. The worst was saved for last, as the Philly Fed Manufacturing Index slumped to just 5.6 points, a remarkable drop from 19.6 the month before. This was way off the estimate of 15.8.

The minutes of the Federal Reserve’s most recent policy meeting were released late Wednesday and the minutes indicated that the Fed is prepared to press the tapering trigger soon. Policymakers said the current QE level of $85 billion monthly purchases of bonds could taper “in coming months” if the economy continued to improve. A scaling down of QE is dollar-positive, so we could see the greenback continue to make gains against the major currencies. Earlier in the week, Fed chair Bernard Bernanke said that the employment market improvement was “meaningful” and that interest rates would likely remain low even after QE ends.

Canadian indicators continue to struggle. On Wednesday, Wholesale Sales dropped to 0.2%, missing the estimate of 0.4%. The indicator points to a weakening in consumer spending, a critical component of economic growth. On Friday, we could see some volatility from USD/CAD, as Canada releases retail sales and CPI numbers.

USD/CAD for Thursday, November 21, 2013

USD/CAD November 21 at 15:30 GMT

USD/CAD 1.0515 H: 1.0517 L: 1.0455

USD/CAD Technical

• USD/CAD is posting strong gains in Thursday trading. The pair has broken through the 1.05 line in North American trading and the Canadian dollar remains under strong pressure.
• On the upside, the pair is facing resistance at 1.0573. This is followed by resistance at 1.0652, which has held firm since October 2011.
• The pair is receiving support at 1.0502. This is followed by a support line at 1.0442, which as been busy throughout November.
• Current range: 1.0502 to 1.0573

Further levels in both directions:

• Below: 1.0502, 1.0442, 1.0337, 1.0282, 1.0224 and 1.0158
• Above 1.0573, 1.0652 and 1.0837 and 1.0945

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in long positions in Thursday trading. This is reflected in the current movement of the pair, as the US dollar has posted strong gains. A majority of the open positions in the USD/CAD ratio are short, indicating a trader bias towards the Canadian dollar reversing its current slide and moving to higher ground.

The Canadian dollar continues to lose ground against its US counterpart. We could see this trend continue during the North American session, as the loonie remains under strong pressure.

USD/CAD Fundamentals

• 13:30 US PPI. Estimate -0.2%. Actual -0.2%.
• 13:30 US Unemployment Claims. Estimate 333K. Actual 323K.
• 13:30 US Core CPI. Estimate 0.1%. Actual 0.2%.
• 14:00 US Flash Manufacturing PMI. Estimate 52.6 points. Actual 54.3 points.
• 14:45 FOMC Member Jerome Powell Speaks.
• 15:00 US Philly Fed Manufacturing Index. Estimate 15.8M. Actual 6.5 points.
• 15:30 US Natural Gas Storage. Estimate -34B. Actual -45B.
• 18:00 FOMC Member James Bullard Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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