USD/CAD – Steady After Weak ADP Non-Farm Payrolls

USD/CAD is showing little change on Wednesday. The pair continues to trade in the mid-1.04 range in Wednesday’s North American session. In economic news, it was another bad day for US releases, as ADP Non-Farm Payrolls slumped to its worst level in six months. Today’s major event is the Federal Reserve Policy Statement, which will be released later in the day. There are no Canadian releases on Wednesday.

The Federal Reserve winds up a policy meeting on Wednesday, its first since Congress hammered out an agreement on the debt ceiling and reopened the government. However, the agreement is little more than a band-aid solution which has pushed off the debt ceiling and budget deadlock for a few months, without resolving these two issues. Meanwhile, recent US data, notably employment numbers, have been sluggish. Given this situation, the Fed is unlikely to push the taper trigger until early 2014. The markets will be waiting for the Fed policy statement later today, and we could see some volatility in the currency markets afterwards.

US employment numbers continue to sag, and the bad news continued on Wednesday with the ADP Non-Farm Payrolls report.  The key indicator tumbled from 166 to 130 thousand, way off the estimate of 151 thousand. This was the weakest reading since April and points to a weak labor market. Last week, Unemployment Claims came in above the estimate and Non-Farm Payrolls tumbled to a six-month low.

In the US, the grim readings continued on Tuesday. PPI and Retail Sales both declined by 0.1%, missing the estimate of 0.2%. CB Consumer Confidence dropped sharply, from 79.7 to 71.2 points, a six-month low. This was well short of the estimate of 75.7 points. Core Retail Sales managed to match the forecast, rising to 0.4%. The mostly weak figures come on the heels of dismal housing numbers on Monday. If confidence in the US economy starts to weaken, we could see the dollar, which is already under pressure from the major currencies, continue to lose ground.

In Canada, inflation continues to be very weak. The Raw Materials Price Index fell 1.5%, a five-month low. This was well below the estimate of -0.4%. The Industrial Product Price Index posted a decline of -0.3%, falling short of the estimate of a 0.2% gain. This was its lowest reading since April. These readings point to weak economic activity, as the Canadian economy continues to struggle, as

USD/CAD for Wednesday, October 30, 2013

USD/CAD October 30 at 15:40 GMT

USD/CAD 1.0459 H: 1.0473 L: 1.0441

USD/CAD Technical

• USD/CAD is almost unchanged in Wednesday trading.
• The pair is facing resistance at 1.0502. This is followed by a resistance line at 1.0573.
• USD/CAD is receiving support at 1.0442. This is a weak line and could  face pressure if the US dollar loses any ground. This is followed by a support level at 1.0337.
• Current range: 1.0442 to 1.0337

Further levels in both directions:

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

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to an increase in short positions on Wednesday. This is reflected in the movement of the pair, as the Canadian dollar has posted slight gains. A majority of the open positions in the ratio are short, indicating a trader bias towards the Canadian dollar moving higher.

The Canadian dollar remains under pressure from the greenback. The FOMC will release a statement later in the day, and this could result in some volatility from USD/CAD.

USD/CAD Fundamentals

• 12:15 US ADP Non-Farm Employment Change. Estimate 151K. Actual 130K.
• 12:30 US Core CPI. Estimate 0.2%. Actual 0.1%.
• 12:30 US CPI. Estimate 0.2%. Actual 0.2%.
• 14:30 US Crude Oil Inventories. Estimate 1.9M.
• 18:00 US FOMC Statement.
• 18:00 US Federal Funds Rate. Estimate <0.25%.

*Key releases are highlighted in bold

*All release times are GMT

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