USD/CAD – Loonie Improves as Canadian Trade Balance Beats Expectations

The Canadian dollar has spent the past week above the 1.05 line, but finally managed to push into 1.04 territory on Thursday. USD/CAD is trading very close to the 1.05 line early in the North American session. The loonie got a boost from a solid Canadian Trade Balance release on Wednesday. US markets are closed on Thursday for the July 4th holiday, so we can expect USD/CAD to be marked by thin trading. There are no Canadian releases on Thursday. The markets will be busy on Friday, as both countries release key employment data.

The Canadian dollar flexed some muscle on Wednesday, reacting positively to Canadian Trade Balance numbers. The trade deficit narrowed from $-0.6 billion to $-0.3 billion, surprising the markets which had anticipated a larger deficit of $-0.7 billion. The commodity-based Canadian dollar also got some help as oil prices pushed above $100 per barrel, as concern intensified over decreasing US supplies and the political turmoil in Egypt.

In the US , the markets had plenty of data to sift through on Wednesday, as the US released four key events. The always important employment numbers looked solid. ADP Non-Farm Payrolls, an unofficial release which precedes Friday’s government release, posted a gain of 188 thousand, its best showing since March. The estimate stood at 161 thousand. Unemployment Claims, released ahead of the July 4th holiday, came in at 343 thousand, slightly below the estimate of 345 thousand. The US continues to churn out larger trade deficits, as the July release came in at -$45.0 billion, much higher than the estimate of $-40.3 billion. Finally, the ISM Non-Manufacturing PMI looked weak, dropping from 53.7 points to 52.2 points. This was well short of the estimate of 54.3 points.

USD/CAD for Thursday, July 4, 2013

USD/CAD 1.0505 H: 1.0557 L: 1.0473

USD/CAD Technical

USD/CAD has moved lower, as the pair flirts with the 1.05 line. On the downside, the pair is testing support at 1.0502. This line has been busy in today’s Asian and North American sessions and could continue to see action.  This is followed by a stronger support level at 1.0442. The pair faces resistance at 1.0573. This line has some breathing room as the pair has moved lower. This is followed by resistance at 1.0652.

• Current range: 1.0502 to 1.0573

Further levels in both directions:

• Below: 1.0502, 1.0442, 1.0337, 1.0282, 1.0229 and 1.0157
• Above: 1.0573, 1.0652, 1.0705, 1.0780 and 1.0853

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Thursday session. This is reflected in what we are seeing from the pair, as the pair has been unable to sustain any momentum in either direction. Short positions continue to enjoy a substantial majority of the open positions, indicating a strong trader bias towards the pair moving lower.

USD/CAD lost some ground on Wednesday, but has settled down on Thursday, as it trades very close to the 1.05 line. With no releases from either the US or Canada on Thursday, we can expect a quiet day from the pair.

USD/CAD Fundamentals

• There are no releases from Canada or the US on Thursday.

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.