USD/CAD – Little Change as US, Canada Post Weak Data

USD/CAD remains almost unchanged, as the pair continues to hover close to the parity line. US and Canadian releases on Thursday both were a disappointment. In the US, Unemployment Claims fell below expectations for a second straight week, while Canadian Building Permits posted another sharp decline. Friday will be a busy day, with Canada releasing three major releases –  Employment Change, Unemployment Rate, and Trade Balance. In the US, today’s key release is Trade Balance.

The pair continues to drift, and is trading in the 0.9980 range. It has been a quiet week for the USD/CAD, which showed little reaction to Thursday’s key releases. In Canada, Building Permits looked awful. This important construction indicator tends to be volatile, making accurate predictions a tricky task. The indicator plunged by 11.2%, shocking the markets, which had anticipated a gain of 4.3%. It was the third sharp drop in the past four readings, and will likely raise red flags about the health of the Canadian housing and construction industries. The markets will be hoping for better news from Friday’s Housing Starts. The week wraps up with the releases of Employment Change and the Unemployment Rate, and if these readings are not in line with market expectations, we could see the Canadian dollar lose ground.

In the US, Unemployment Claims continued to disappoint the markets. The key indicator had some sizzling readings in January, but has fallen from its dizzying heights in a hurry. For the second straight week, the key indicator missed the market estimate. There were 368 thousand new claims, missing the forecast of 361 thousand. The markets are concerned that the weaker employment numbers will weigh on the fragile US recovery. If we continue to see further weak US data, we will likely see a reaction in the currency markets. Meanwhile, Federal Reserve member Charles Evans stated that the Federal Reserve would remain “accommodative” until the US economy improves. The Fed has set a goal of 6.5% unemployment before winding up its current QE program, but Evans doesn’t see the unemployment rate dropping to such levels until 2015. 

USD/CAD for Friday, February 8, 2013

USD/CAD February 8 at 12:00 GMT

0.9982 H: 0.9991 L: 0.9971

USD/CAD Technical

USD/CAD continues to treat the markets to more of the same,  as it drifts slightly below the parity line. With almost no activity from the pair, the proximate support and resistance lines remain intact (S1 and R1 above). USD/CAD continues to face resistance just above parity, at 1.0003. This is a weak line, and could face pressure if the US dollar is able to sustain any upward momentum. This is followed by resistance at 1.0041. On the downside, the pair continues to receive support at 0.9954. This line has been busy throughout the week, but is still in place. There is stronger support at 0.9898.

Current range: 99.54 to 1.0003.

Further levels in both directions:

• Below: 0.9954, 0.9898, 0.9833, 0.9809 and 0.9767.
• Above: 1.0003, 1.0041, 1.01, 1.0157, 1.0207, 1.0286, 1.0365 and 1.0443.

OANDA’s Open Position Ratios

USD/CAD has gone quiet, after some strong movement in favor of short positions. The current lack of activity is reflected in the drifting we are currently seeing in USD/CAD. The pair has had a quiet week, unable to sustain any momentum in either direction. Long positions make up a slight majority in the ratio, indicative of a bias towards the US dollar pushing back above parity.

USD/CAD pair continues to be marked by narrow range trading, within site of the parity line. We could see more action from the pair, as there are more key Canadian and US releases scheduled for Friday. Any unexpected readings in these releases could affect the direction of USD/CAD, which so far has shrugged off this week’s economic releases.

USD/CAD Fundamentals

• 1:00 US FOMC Member Charles Evans Speaks.
• 13:15 Canadian Housing Starts. Estimate 196K.
• 13:30 Canadian Employment Change. Estimate 4.5K.
• 13:30 Canadian Unemployment Rate. Estimate 7.2%.
• 13:30 Canadian Trade Balance. Estimate -1.5B.
• 13:30 US Trade Balance. Estimate -45.7B.
• 15:00 US Wholesale Inventories. Estimate 0.5%

*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.