USD/CAD – Slightly Higher as US CPI Declines, Jobless Claims Down

The Canadian dollar is slightly down on Thursday, following strong gains a day earlier. Early in the North American session, the pair is trading at the 1.2940. There are no Canadian releases on Thursday. In the US, CPI came in at -0.2%, matching expectations. Core CPI was stronger, with an slight gain of 0.2%. Unemployment Claims surprised with a strong improvement, dipping to 255 thousand, compared to a forecast of 269 thousand. The Empire State Manufacturing Index continues to struggle, posting a gain of -11.4 points, weaker than the forecast of -7.3 points. Traders should keep a close eye on Friday’s key releases out of the US, Consumer Sentiment and JOLTS Jobs Openings.

Federal Reserve policymakers are strongly divided on the question of a rate hike in 2015. This was underscored on Monday by FOMC member Lael Brainard, who stated that the Fed should not raise rates before global economic conditions improve. Brainard noted that the Chinese slowdown has caused economic turmoil worldwide, and the US economy could lose steam due to weaker exports and weak global economic conditions. Clearly, Brainard is of the view that the Fed should take its time and proceed with caution. With global economic conditions unlikely to change anytime soon, a rate move may be on hold unless the US posts some key releases, such as GDP or employment numbers, which match or beat expectations.

A very different view was put forth earlier in the week by another FOMC member, Dennis Lockhart. Lockhart, considered a centrist on monetary policy, sounded more optimistic about a rate hike before the end of 2015. Lockhart did not rule out a rate hike in October, and added that the Fed would have more data to evaluate before its December policy meeting. With FOMC members sending out such conflicting messages, it is no wonder that the markets have been unable to get a handle on the timing of a rate hike, and this failure of the Fed to communicate a clear message to the Fed has hurt the US dollar, as we saw after the release of the Fed minutes last week.

USD/CAD Fundamentals

Thursday (Oct. 15)

• 12:30 US CPI. Estimate -0.2%. Actual -0.2%.
• 12:30 US Core CPI. Estimate 0.1%. Actual 0.2%.
• 12:30 US Unemployment Claims. Estimate 269K. Actual 255 thousand.
• 12:30 US Empire State Manufacturing Index. Estimate -7.3 points. Actual -11.4 points.
• 14:00 US Philly Fed Manufacturing Index. Estimate -1.8 points.
• 14:30 Fed FOMC Member William Dudley Speaks.
• 14:30 US Natural Gas Storage. Estimate 92B.
• 15:00 US Crude Oil Inventories. Estimate 2.2M.
• 19:30 US Federal Budget Balance. Estimate 93.8B.  

Upcoming Key Events

Friday (Oct. 16)

•  14:00 US Preliminary UoM Consumer Sentiment. Estimate 88.8 points.
•  14:00 US JOLTS Job Openings. Estimate 5.77M.

*Key releases are highlighted in bold

*All release times are GMT

USD/CAD for Thursday, October 15, 2015

USD/CAD October 15 at 12:40 GMT

USD/CAD 1.2940 H: 1.2927 L: 1.2873

USD/CAD Technical

• USD/CAD was uneventful in the Asian and European sessions. The pair has posted slight gains early in the North American session.
• 1.2930 is a weak support level and was tested earlier.
• 1.3063 is providing resistance.
• Current range: 1.2930 to 1.3063

Further levels in both directions:

• Below: 1.2930, 1.2798, 1.2646 and 1.2552
• Above: 1.3063, 1.3165, 1.3213 and 1.3310

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little movement on Thursday. The ratio is evenly split between long and short positions, indicative of a lack of trader bias as to expectations about USD/CAD direction.

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.