USD/CAD – Rangebound in Holiday Trade

The Canadian dollar is flat on Monday, as USD/CAD trades in the low-1.09 range in the North American session. There are no Canadian releases to start off the week, with Canadian markets closed for a holiday. In the US, today’s only release is Loan Officer Survey.

US employment numbers failed to impress last week. On Friday, Nonfarm Payrolls took a tumble, slipping to 209 thousand, compared to 288 thousand a month earlier. This was well below the estimate of 231 thousand and marked a four-month low. Earlier in the week, Unemployment Claims rose to 302 thousand, very close to the estimate of 303 thousand. There was positive news from the manufacturing sector, as US ISM Manufacturing PMI rose to 57.1 points, its best showing since November. As well, UoM Consumer Sentiment continues to look strong, coming in at 81.8 points. The index has not been below the 80-point level in 2014, pointing to strong consumer confidence.

Last week, the Federal Reserve released a policy statement, with the Fed sounding somewhat dovish in tone. Policymakers acknowledged lower unemployment levels, but noted that “there remains significant underutilization of labor resources” in the economy. The Fed statement reinforces the view that the US central bank is in no rush to raise interest rates after the termination of QE, which is expected in October. As well, the Fed said that inflation levels have moved somewhat closer to the Fed’s target of 2.0%. The Fed has remained vague as to when it will raise interest rates, but if the economy continues moving in the right direction, a rate increase is likely before mid-2105.

The Canadian dollar had a rough week, losing about 140 points and trading at its lowest levels since early June. The loonie showed signs of life on Thursday, courtesy of unexpected positive news from Canadian GDP. The key indicator rose 0.4% in June, edging above the estimate of 0.3%. However, it didn’t take long for the US dollar to recover, as USD/CAD is back above the 1.09 line.

USD/CAD for Monday, August 4, 2014

USD/CAD August 4 at 14:10 GMT

USD/CAD 1.0923 H: 1.0926 L: 1.0918

USD/CAD Technical

• USD/CAD is showing little movement in light trade.
• 1.0961 remains an immediate resistance line. 1.1004 is stronger.
• 1.0852 is the next support level.
• Current range: 1.0852 to 1.0961

Further levels in both directions:

• Below: 1.0852, 1.0775, 1.0678 and 1.0572
• Above: 1.0961, 1.1004, 1.1124 and 1.1278

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions in Monday trade, continuing the movement we saw a day earlier. This is not consistent with the pair’s movement, as the Canadian dollar is almost unchanged. The ratio has a majority of short positions, indicative of trader bias towards the Canadian dollar breaking out of range and posting gains.

USD/CAD Fundamentals

• Tentative – US Loan Officer Survey.

*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.