USD/CAD – US Dollar Loses Ground Despite Positive Employment Data

USD/CAD has lost ground on Thursday, as the Canadian dollar takes advantage of a broadly-lower US dollar. Early in the North American session, the pair is trading in the mid-1.10 range. In economic news, Canadian New Housing Price Index had its best showing since June 2012. Over in the US, Unemployment Claims dropped and easily beat the estimate. Retail Sales and Core Retail Sales both improved in February and met market expectations.

In the US, concern about the job market eased after a solid Unemployment Claims release. The key indicator dropped to 315 thousand, down from 323 thousand the previous week. This beat the estimate of 334 thousand. This was the second straight drop for the key employment indicator. Core Retail Sales and Retail Sales both posted gains of 0.3%, which were within market expectations. These indicators are the primary gauges of consumer spending, and although the gains were modest, they mark an improvement over the January readings.

With Nonfarm Payrolls improving and Unemployment Claims dropping, the markets can breathe more comfortably as the Fed is likely to take its scissors and trim QE next week for the third time. New York Fed President William Dudley stated last week that the threshold to alter the Fed’s program to wind up QE was “pretty high”. In other words, short of a serious economic downturn in the US economy, we can expect the QE tapers to continue.

USD/CAD for Thursday, March 13, 2014

USD/CAD March 13 at 15:00 GMT

USD/CAD 1.1061 H: 1.1120 L: 1.1044

USD/CAD Technical

• USD/CAD has posted strong losses in the Asian session, dropping below the 1.10 level. The pair has settled down in the European and North American sessions.
• The key level of 1.10 is providing support. Next is support at 1.0906, protecting the 1.09 level.
• 1.1094 has reverted to a resistance line following strong gains by the Canadian dollar. It is not a strong line and could face pressure during the day. This is followed by 1.1177.
• Current range: 1.10 to 1.1094

Further levels in both directions:

• Below:  1.1000, 1.0906, 1.0852 and 1.0783
• Above: 1.1094, 1.1177, 1.1319, 1.1496 and 1.1639

OANDA’s Open Positions Ratio

USD/CAD ratio is posting gains in long positions, continuing the trend we saw in the previous day. This is not consistent with what we are seeing from the pair, as the Canadian dollar has posted strong gains. The ratio has a majority of short positions, indicating trader bias towards the loonie moving higher.

The Canadian dollar has dropped below the 1.11 line in Thursday trading. The pair is steady in the North American session.

USD/CAD Fundamentals

• 12:30 Canadian New Housing Price Index. Estimate 0.3%. Actual 0.3%.
• 12:30 Canadian Capacity Utilization Rate. Estimate 82.0%. Actual 82.3%.
• 12:30 US Core Retail Sales. Estimate 0.2%. Actual 0.3%.
• 12:30 US Retail Sales. Estimate 0.3%. Actual 0.3%.
• 12:30 US Unemployment Claims. Estimate 334K. Actual 315K.
• 12:30 US Import Prices. Estimate 0.6%. Actual 0.9%.
• 14:00 US Business Inventories. Estimate 0.4%. Actual 0.4%.
• 14:00 US Federal Reserve Governor Nomination Hearings.
• 14:30 US Natural Gas Storage. Estimate -199B. Actual -195B.
• 17:01 US 30-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate -223.2B

*Key releases are highlighted in bold

*All release times are GMT

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