USD/CAD – Loonie Loses Ground as Canadian Building Permits Slides

The Canadian dollar continues to lose ground in Thursday trading. In the North American session, USD/CAD is trading in the mid-1.08 range. In economic news, Canadian Building Permits posted a sharp slide, while US Unemployment Claims looked solid again this week and beat the estimate.

The Canadian dollar’s woes continue, as the currency has surrendered over two cents since the start of the week. There was more bad news from Canadian key releases, as Building Permits plunged by 6.7%, compared to a 7.4% gain the month before. This decline was much sharper than the estimate of -2.3%. Earlier in the week, the country’s trade deficit widened and Ivey PMI pointed to contraction, dropping below the key 50-point level.

US employment releases have started 2014 on a positive note. Unemployment Claims dropped to 330 thousand, down from 339 thousand. This beat the estimate of 337 thousand. Earlier in the week, ADP Non-Farm Payrolls looked excellent, as the indicator climbed to 238 thousand, hitting a two-year high. With another QE taper in January a strong possibility, every employment release will be under the market microscope and could impact on the currency markets.

Canadian inflation levels have been anemic, and there was no change for the better as we start 2014. The Raw Materials Price Index, an important gauge of inflation in the manufacturing sector, slumped badly, falling 4.2%. This was its sharpest drop since June 2011. The estimate stood at -1.1%. The Industrial Product Price Index posted its first gain in three months, as it edged above the 0.0% forecast with a small gain of 0.1%. The weak inflation numbers point to a slow economy which is weighing on the struggling Canadian dollar.

USD/CAD for Thursday, January 9, 2014

USD/CAD January 9 at 17:05 GMT

USD/CAD 1.0841 H: 1.0872 L: 1.0819

USD/CAD Technical

• USD/CAD continues to climb in Thursday trading. The pair touched a high of 1.0872 earlier in the day before retracting.
• On the downside, 1.0783 continues to provide support. This is followed by a support level at 1.0652.
• 1.0852 is providing resistance. This is followed by resistance at the key 1.10 line, which has remained intact since September 2009.
• Current range: 1.0783 to 1.0852

Further levels in both directions:

• Below: 1.0783, 1.0652, 1.0573, 1.0502 and 1.0442
• Above 1.0852, 1.10, 1.1094 and 1.1319.

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in Thursday trading. This is not reflected in the pair’s movement, as the Canadian dollar continues to lose ground. USD/CAD is made up of a majority of short positions, indicating a trader bias towards the Canadian dollar reversing direction and moving higher against the US currency.

The Canadian dollar is having a dismal week and continues to lose ground. USD/CAD is steady early in the North American session.

USD/CAD Fundamentals

• 13:15 Canadian Housing Starts. Estimate 199K. Actual 238K.
• 13:30 Canadian Building Permits. Estimate -2.3%. Actual -6.7%.
• 13:30 Canadian NHPI. Estimate 0.2%. Actual 0.0%.

*Key releases are highlighted in bold

*All release times are GMT

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