USD/CAD: Steady As US Employment, Manufacturing Numbers Improve

 | Jun 20, 2014 01:38AM ET

It continues to be an uneventful week for USD/CAD. Early in the Thursday North American session, as the pair is trading in the low-1.08 range. On the release front, US numbers had a good day, as Unemployment Claims and the Philly Fed Manufacturing Index improved in May and beat their estimates. There are no Canadian releases on Thursday, but the markets are keeping an eye on two major releases on Friday - Core Retail Sales and Core CPI.

There was positive economic news out of the US on Thursday, as Unemployment Claims dipped to 312 thousand last week, beating the estimate of 316 thousand. As well, the Philly Fed Manufacturing Index, which has been on the upswing for most of 2014, continued the trend and improved to 17.8 points, crushing the estimate of 14.3. This was the index's strongest reading since last August, and points to a manufacturing sector which is expanding in order to keep up with increasing demand.

The Federal Reserve continued to trim its QE program, reducing the scheme by $10 billion, to $35 billion/month. If all goes as planned, the Fed could wind up QE in the fall. The Fed also hinted that interest rates will continue to stay low for the foreseeable future, which likely means that we won't see any rate hikes before the first quarter of 2015. With regard to economic activity, the Fed noted that the recovery is continuing, but it reduced its forecast of economic growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent. The bottom line? There were no dramatic items in the Fed statement, with one analyst describing current Fed policy as "steady as she goes".

In Canada, there was more good news as Wholesale Sales, an important indicator of consumer spending, jumped 1.2% in May, crushing the estimate of 0.3%. Earlier in the week, Foreign Securities Purchases posted a gain of $10.13 billion, its highest level since last May. The estimate stood at $4.27 billion. The markets are hoping the strong numbers continue on Friday, with the release of Core CPI and Core Retail Sales.