USD/CAD: Flat After Strong Gains
MarketPulse | Jan 22, 2015 11:53AM ET
The Canadian dollar stabilized on Thursday as USD/CAD trades quietly in the mid-1.23 range. The pair has taken a pause after posting strong gains a day earlier. Today’s highlight was Unemployment Claims. The key indicator dipped to 301 thousand, short of expectations. There are no Canadian releases on Thursday.
US unemployment claims missed expectations for the second straight week. The key indicator improved to 309 thousand, better than the previous reading of 316 thousand. This fell short of the estimate of 301 thousand. Although the US labor market has improved, this is the fourth straight reading where unemployment claims has missed expectations. On Wednesday, construction readings were a mix. Building Permits came in at 1.03 million, short of the estimate of 1.06M. Housing Starts improved to 1.09 million, beating expectations of 1.04M.
Things have gone from bad to worse for the Canadian currency, which continues to get hammered by the US dollar. USD/CAD has surged almost 400 points since Tuesday, its highest level since 2009. On Wednesday, the Canadian dollar reacted sharply to a decline of -0.2% in Wholesale Sales, as well as shocking rate cut by the Bank of Canada. With oil prices having fallen by 50% since the summer, and the BOC expects the ramifications on inflation, exports and consumer spending to be substantial. In Wednesday’s rate statement, the BOC said that the rate cut is intended to restore economic output, and expressed the hope that a strong US economy would boost Canadian growth as well.
- USD/CAD 1.2344 H: 1.2389 L: 1.2313
USD/CAD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.2096 | 1.2190 | 1.2261 | 1.2387 | 1.2469 | 1.2543 |
- USD/CAD has settled down on Thursday, after strong gains a day earlier. The pair has showed little movement during the day, and tested resistance at 1.2387 earlier in the North American session.
- On the upside, 1.2387 has weakened following Wednesday’s sharp gains by USD/CAD. 1.2469 is stronger.
- 1.2261 is providing strong support.
- Current range: 1.2261 to 1.2387
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Further levels in both directions:
- Below: 1.2261, 1.2190, 1.2096, 1.1975 and 1.1875
- Above: 1.2387, 1.2469, 1.2543 and 1.2680
OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged on Thursday, continuing the pattern which has marked the ratio for most of the week. This is consistent with the lack of movement we are seeing from the pair. The ratio has a majority of short positions, indicative of trader bias towards the Canadian dollar moving to higher ground.
USD/CAD Fundamentals
- 13:30 US Unemployment Claims. Estimate 301K. Actual 309K.
- 14:00 US HPI. Estimate 0.4%. Actual 0.8%.
- 15:30 US Natural Gas Storage. Estimate -231B. Actual -216B.
- 16:00 US Crude Oil Inventories. Estimate 2.5M. Actual 10.1M.
*Key releases are highlighted in bold
*All release times are GMT
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