USD/CAD – Edges Lower As Ivey PMI, Unemployment Claims Improve

The Canadian dollar has showed slight improvement on Thursday and is trading in the mid-1.10 range in the North American session. In economic releases, Canadian Ivey PMI posted a huge jump in January. There was more good news south of the border as US Unemployment Claims rebounded and beat the estimate. Both US and Canadian Trade Balance missed the forecasts.

Unemployment Claims dropped to 331 thousand, down from 348 thousand in the previous release. This was good enough to beat the estimate of 337 thousand. On Friday we’ll get a look at Non-Farm Payrolls, which follows a very disappointing ADP Nonfarm Employment Change. This key release could dictate whether the Federal Reserve goes ahead with a third QE taper in February. The Federal Reserve has scaled down its bond-buying scheme with two tapers of $10 billion, reducing QE to $65 billion each month. The Fed would like to terminate the scheme by the end of 2014.

Canadian Ivey PMI climbed to 56.8 points in January, a dramatic jump from 46.3 points a month earlier. This easily beat the estimate of 51.3 points and was the index’s best showing since November. A reading over the 50-point level indicates expansion. The Canadian dollar has not been able to take advantage of the sharp release as it continues to trade at high levels. On Wednesday, Canadian Building Permits continues to slide, posting a decline of 4.1% in January. The markets had expected a strong gain of 2.3%. This decline follows another sharp drop of 6.7% a month earlier, indicating trouble in the critical construction industry.

USD/CAD for Thursday, February 6, 2014

USD/CAD February 6 at 15:55 GMT

USD/CAD 1.1067 H: 1.1121 L: 1.1051

USD/CAD Technical

• USD/CAD has edged lower in Thursday trading. The pair is showing some volatility, as it climbed above the 1.11 line in the European session but has retracted in North American trading.
• The key level of 1.100 is providing support. This is followed by a support line at the key level of 1.0906, protecting the 1.09 line.
• On the upside, 1.1094 has reverted to a resistance role. This is followed by resistance at 1.1177.
• Current range: 1.1000 to 1.1094

Further levels in both directions:

• Below: 1.1094, 1.1000, 1.0906, 1.0852 and 1.0783
• Above: 1.1177, 1.1319, 1.1496 and 1.1610

OANDA’s Open Positions Ratio

USD/CAD ratio is almost unchanged in Thursday trading. This is not consistent with what we are seeing from the pair, as the Canadian dollar  has posted slight gains. The ratio continues to be made up of a majority of short positions, indicating a trader bias towards the Canadian dollar continuing to improve.

USD/CAD has shown movement in both directions on Thursday, but has been unable to maintain any momentum. In the North American session, the Canadian dollar is showing improvement.

USD/CAD Fundamentals

• 12:30 US Challenger Job Cuts. Actual 11.6%.
• 13:30 Canadian Trade Balance. Estimate +0.7B. Actual -1.7B..
• 13:30 US Trade Balance. Estimate -35.8B. Actual -38.7B. 
• 13:30 US Unemployment Claims. Estimate 337K. Actual 331K.
• 13:30 US Preliminary Nonfarm Productivity. Estimate 2.8%. Actual 3.2%.
• 13:30 US Preliminary Unit Labor Costs. Estimate -0.7%. Actual -1.7%.
• 15:00 US FOMC Member Daniel Tarullo Speaks.
• 15:00 Canadian Ivey PMI. Estimate 51.3 points. Actual 56.8 points
• 15:30 US Natural Gas Storage. Estimate -270B. Actual -262B.

*Key releases are highlighted in bold

*All release times are GMT

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