USD/CAD – US Dollar Moves Higher, Pushes Past 1.02 Level

The US dollar has moved upwards against the Canadian dollar in Monday trading. The pair has crossed above the 1.02 line early in the North American session. The greenback has been pushing higher since Friday, when both countries released disappointing employment numbers. The week is starting off  very quietly, with just two releases. In Canada, the BOC will release its quarterly Business Outlook. Meanwhile, US Federal Reserve head Bernard Bernanke will address a conference hosted by the Federal Reserve of Atlanta.

The US dollar posted gains on Friday against its Canadian counterpart, as the markets reacted negatively to very weak employment data out of Canada and the US. In Canada, Employment Change hit a multi-year low, shocking the markets with a decline of 54.5 thousand. The estimate called for a modest gain of 6.8 thousand. The Unemployment Rate jumped from 7.0% to 7.2%, above the forecast of 7.1%. The news was not much better south of the border, as the US Non-Farm Employment Rate posted a gain of just 88 thousand, well off the estimate of 198 thousand. It was the key indicator’s lowest gain since July 2012. Although the Unemployment rate edged down from 7.7% to 7.6%, this was attributed to a sharp drop in the participation rate. In other releases, Canada’s trade deficit widened to $1.0 billion, way off the estimate of a $0.2 billion surplus. There was much better news from Canadian Ivey PMI, which jumped from 51.1 points to 61.6, blowing past the estimate of 52.4 points.

In the US, talk of a deepening recovery is being replaced by concerns about the direction the economy, as the US continues to post out dismal numbers. With every major release over the past two weeks failing to meet expectations, the markets are justifiably becoming increasingly anxious. The data comes from sectors throughout the economy – housing, manufacturing consumer confidence and employment releases have all missed their estimates. Will we see a turnaround in this week’s numbers? If not, we could see some volatility in the currency markets.

USD/CAD for Monday, April 8, 2013

1.0209 H: 1.0210 L: 1.0156

USD/CAD Technical 

USD/CAD continues to move higher, as the pair has crossed above 1.02 in Monday trading. The pair is receiving support at 1.0157. The next support level is at 1.0041. This line is protecting the all-important parity level. On the upside, the pair is facing resistance at 1.0229. This is a weak line, and could be tested if the US dollar continues to push higher. This line was last tested in late December, and could see activity if the greenback’s upward move continues.

•  Current range: 1.0157 to 1.0229

Further levels in both directions:

• Below: 1.0157, 1.01, 1.0041, 1.00 and 99.46
• Above: 1.0229, 1.0282, 1.0361 and 1.0446

OANDA’s Open Position Ratios

The USD/CAD ratio is pointing to movement towards long positions in Monday trading. This is consistent with what we are seeing from the pair, as the US dollar has been posting gains against the loonie. The ratio continues to have a majority of short positions, indicating a bias in favor of the pair reversing its upwards direction.

USD/CAD broke out of range trading late last week, and the US dollar has been pushing higher, continuing the upward momentum on Monday. We could see the pair continue to trade in the low-1.02 range.

USD/CAD Fundamentals

• 14:30 Canadian BOC Business Outlook Survey
• 11:15 US Fed Chairman Bernard Bernanke Speaks

*Key releases are highlighted in bold

*All release times are GMT

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