USD/CAD – Loonie Weakens on Weak Canadian Employment Data

The Canadian dollar has posted slight losses on Friday, as USD/CAD trades in the mid-1.09 range late in the session. In economic news, Canadian Employment Change posted a gain of just 0.2 thousand, well short of expectations. The unemployment rate edged lower, to 7.0%. In the US, there are no major releases on today’s schedule.

Canada wrapped up the week with disappointing employment numbers, as Employment Change came in almost flat, at just 0.2 thousand. This surprised the markets, which had expected a strong gain of 25.4 thousand. The indicator tends to show sharp swings, which often results in estimates that are well off the mark. There was better news from the unemployment rate, which dipped to 7.0%, down from 7.1%. This matched the forecast.

South of the border, US Unemployment Claims improved, dipping below the 300 thousand level last week. The key indicator dropped to 289 thousand, beating the estimate of 305 thousand. The four-week claims average, which is less volatile than the weekly count, dipped to 293,500, its lowest level since February 2006. The stronger numbers point to increased hiring in response to stronger demand, which in turn has contributed to gains in income and stronger consumer spending. An improving job market is critical for economic growth, and the US dollar has gained broad strength as key US data points upwards.

Canadian numbers were sharp on Thursday, led by Building Permits which posted a strong gain of 13.5% last month. This figure was close to the previous release of 13.8%, and crushed the forecast of -1.8%. Building Permits is an important gauge of the strength of the construction sector, and the markets will be hoping that Housing Starts, which will be released on Monday, follows suit with a strong showing. There was excellent news from Canadian Ivey PMI, which climbed to 54.1 points, matching the forecast. This was up sharply from 46.9 points a month earlier. The PMI pushed above the 50 line, which marks expansion, for the first time since April.

USD/CAD for Friday, August 8, 2014

USD/CAD August 8 at 13:15 GMT

USD/CAD 1.0966 H: 1.0967 L: 1.0910

USD/CAD Technical

• USD/CAD was uneventful in the Asian session. The pair has posted gains late in the European trading.
• 1.1004 is an immediate resistance line. 1.1124 follows.
• 1.0961 has reverted to a support role as the pair climbs higher. This line was breached earlier and remains fluid. 1.0852 is stronger.
• Current range: 1.0961 to 1.1004

Further levels in both directions:

• Below: 1.0961, 1.0852, 1.0775 and 1.0678
• Above: 1.1004, 1.1124, 1.1278 and 1.1459

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in Friday trade, continuing the pattern we have seen for most of the week. This is not consistent with the pair’s movement, as the US dollar has pushed higher. The ratio has a majority of short positions, indicative of trader bias towards the Canadian dollar reversing directions and moving upwards.

USD/CAD Fundamentals

• 12:30 Canadian Employment Change. Estimate 25.4K. Actual 0.2K.
• 12:30 Canadian Unemployment Rate. Estimate 7.0%. Actual 7.0%. 
• 12:30 US Preliminary Nonfarm Productivity. Estimate 1.4%. Actual 2.5%.
• 12:30 US Preliminary Unit Labor Costs. Actual 1.3%. Actual 0.6%.
• 14:00 US Wholesale Inventories. Estimate 0.6%.

* 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.