USD/CAD: Rangebound As Markets Eye Non-Farm Payrolls

 | Oct 22, 2013 02:02AM ET

It's been a very quiet Monday in the currency markets, and USD/CAD is showing almost no change. In the North American session, the pair is trading very close to the 1.03 line. In economic news, US Existing Home Sales disappointed, coming in below the estimate. The markets will also be keeping a close eye on Non-Farm Payrolls, which will be released on Tuesday. North of the border, Canadian Wholesale Sales posted a gain of 0.5%, just shy of the estimate of 0.6%.

With the debt crisis out of the way, at least for a while, the markets have been able to shift their attention to economic data. US Existing Housing Sales dropped to a three-month low, falling to 5.29 million. This fell short of the estimate of 5.31 million. On Tuesday, we'll get a look at key employment data, with the release of Non-Farm Payrolls and the Unemployment Rate.

After a bitter political struggle which saw the US on the brink of a sovereign default, the Republicans and Democrats finally reached an agreement last week to reopen the government and raise the debt ceiling. However, the deal provides short-term relief only - the government will be funded until January 15, while the debt limit will be raised until February 7. So, we could be right back where we started in just a few months. The dollar initially gained ground after the agreement was announced, but was broadly lower as optimism faded. The Canadian dollar took advantage of the greenback's woes, as USD/CAD dropped close to the 1.03 line late last week, where the pair continues to trade.

The recent government shutdown cancelled some US economic releases, notably Non-Farm Payrolls, one of the most important employment releases. The September report was supposed to be released in early October, but has been rescheduled for release on Tuesday. The NFP release could have a major impact on EUR/USD. Meanwhile, last week's Unemployment Claims came in at 357 thousand, very close to the estimate of 358 thousand. This figure was an improvement from last week, but still well above previous releases. The shutdown inflated the release, as hundreds of thousands of Federal employees were laid off. This week's estimate is lower, with an estimate of 341 thousand.