USD/CAD – Canadian Dollar Climbs as GDP Beats Estimate

USD/CAD is higher on Thursday. The Canadian dollar has finally shown some upward movement, as it trades in the low-1.04 range in Thursday’s North American session. The loonie received help from Canadian GDP, which posted a 0.3% gain. In  the US, Unemployment Claims came in very close to the estimate, and the Federal Reserve announced that it was maintaining current QE levels.

US Unemployment Claims looked solid on Thursday, ending a string of weak employment releases. Unemployment Claims dropped from 350 to 340 thousand, edging below the estimate of 341 thousand. The recent government shutdown had pushed up claims in recent weeks as laid-off workers applied for benefits, but unemployment claims have been dropping since the reopening of the government in October. On Wednesday, ADP Non-Farm Payrolls dropped to 130 thousand in September, compared to 166 thousand the month before. This was well off the estimate of 151 thousand. It was the indicator’s lowest level showing six months and underscores that the US labor market is struggling to create new jobs.

Unlike countries such as the US and the UK, Canada releases GDP on a monthly, rather than quarterly basis. The September GDP release came in at 0.3%. Although the indicator dropped from 0.6% in August, the Canadian dollar gained ground, as the GDP reading beat the estimate of 0.2%. However, with the Canadian economy marked by low inflation and weak growth, the loonie will have trouble making inroads against the US dollar if Canadian data fails to show significant improvement.

The Federal Reserve wrapped up its policy meeting on Wednesday, the first meeting since Congress reached an agreement on the debt ceiling and the shutdown. As expected, the Fed said that it would maintain QE at current levels of $85 billion each month. However, the Fed’s policy statement was less dovish than expected, as the Fed noted that the economy was expanding “at a moderate pace” and left the door open for QE tapering in December. However, the prevailing view in the markets is that short of a sharp turnaround in US numbers, QE tapering will be on hold until early 2014.

USD/CAD for Thursday, October 31, 2013

USD/CAD October 31 at 14:30 GMT

USD/CAD 1.0434 H: 1.0490 L: 1.0421

USD/CAD Technical

• USD/CAD has lost ground in Thursday trading. The pair touched a low of 1.0421 late in the European session, and the Canadian dollar continues to put pressure on its US counterpart.
• The pair is facing resistance at 1.0442. This is a weak line which could be breached if the US dollar recovers. This is followed by a resistance line at 1.0502.
• USD/CAD is receiving support at 1.0337. This is followed by a support level at 1.0282, which was the low point when the US dollar began its rally about one week ago.
• Current range: 1.0337 to 1.0442

Further levels in both directions:

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

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in Thursday trading. This is not reflected in the movement of the pair, as the Canadian dollar has posted gains against the US dollar. A majority of the open positions in the ratio are short, indicating a trader bias towards the Canadian dollar moving higher.

The Canadian dollar has reversed its recent slide, and is putting pressure on the greenback since the European session. We could see the loonie continue to improve during the North American session.

USD/CAD Fundamentals

• 12:30 Canadian GDP. Estimate 0.2%. Actual 0.3%.
• 12:30 US Unemployment Claims. Exp. 341K. Actual 340K.
• 13:00 US Treasury Secretary Jack Lew Speaks.
• 13:45 US Chicago PMI. Exp. 55.1 points.
• 14:30 US Natural Gas Storage. Exp. 35B.

*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.