USD/CAD – Canadian Dollar Unchanged as US Posts Mixed Job Numbers

The Canadian dollar has paused on Thursday, following sharp gains in the Wednesday session. Early in North American trade, USD/CAD is trading at the 1.33 line. It’s a busy day on the release front. Canadian RMPI, which measures inflation in the manufacturing sector, came in at -1.5%, better than the forecast of -2.0%. In the US, ADP Nonfarm Employment Change disappointed with a reading of 153 thousand, well off the forecast of 171 thousand. There was better news from unemployment claims, which dropped to a 7-week low at 235 thousand. Later in the day, the US releases ISM Non-Manufacturing PMI. Employment numbers will be in the spotlight on Friday, led by US Nonfarm Payrolls and Canadian Employment Change.

The US dollar retreated ahead of the Federal Reserve minutes on Wednesday and the Canadian currency took full advantage, gaining close to one percent. USD/CAD has dropped to a low of 1.3254 on Thursday, its lowest level since December 14. The Canadian dollar slumped in the last two weeks of 2016, but has rebounded. With Canada and the US releasing key employment numbers on Friday, we could see some volatility from USD/CAD.

The Federal Reserve was in the spotlight on Wednesday, as the Fed released the minutes of its policy meeting in December. At the meeting, the Fed raised rates by a quarter point for the only time in 2016. The minutes indicated that FOMC members are concerned about higher inflation levels, given the “prospects for more expansionary fiscal policies in the coming years”. This is a clear reference to president-elect Trump’s plans to increase fiscal spending and cut taxes, which would likely result in higher inflation, something the Fed  hasn’t had to deal with for years. Still, policymakers appear unchanged in their view that gradual rate hikes remains an appropriate monetary policy. The Fed members acknowledged that there is “considerable uncertainty” regarding future fiscal and economic programs. Many analysts are predicting another rate hike in June, but this could of course change, depending on how the effect that Trump’s economic platform has on the US economy. The Fed will need at least a few months to digest the economic stance of the incoming administration, and the uncertainty mentioned in the Fed minutes could lead to volatility in the markets in what promises to be an interesting first quarter of 2017.

USD/CAD Fundamentals

Thursday (January 5)

• 7:30 US Challenger Job Cuts. Actual 42.4%
• 8:15 US ADP Nonfarm Employment Change. Estimate 171K. Actual 153K
• 8:30 US Unemployment Claims. Estimate 262K. Actual 235K
• 8:30 Canadian RMPI. Estimate -1.5%. Actual -2.0%
• 8:30 Canadian IPPI. Estimate 0.2%. Actual 0.3%
• 9:45 US Final Services PMI. Estimate 53.4
• 10:00 US ISM Non-Manufacturing PMI. Estimate 56.6
• 10:30 US Natural Gas Storage. Estimate -97B
• 11:00 US Crude Oil Inventories. Estimate -1.8M

Friday (January 6)

• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 175K
• 8:30 US Unemployment Change. Estimate 4.7%

*All release times are GMT

*Key events are in bold

USD/CAD for Thursday, January 5, 2017

USD/CAD January 5 at 8:40 EST

Open: 1.3297 High: 1.3313 Low: 1.3254 Close: 1.3295

USD/CAD Technical

• USD/CAD posted slight losses in the Asian session. In European trade, the pair posted losses but has recovered
• 1.3253 is providing support
• 1.3371 is the next resistance line

Further levels in both directions:

• Below: 1.3253, 1.3120 and 1.3003
• Above: 1.3371, 1.3457, 1.3589 and 1.3759
• Current range: 1.3253 to 1.3371

OANDA’s Open Positions Ratio

USD/CAD ratio is showing little change in the Thursday session. Currently, short positions have a slight majority (54%). This is indicative of slight trader bias towards USD/CAD breaking out and moving lower.

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.