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By Kenny Fisher

The Canadian dollar is holding its own in Thursday trading, despite strong US releases during the day. In the North American session, USD/CAD is trading in the low-1.09 range. In economic news, US Unemployment Claims met expectations with another strong release, while the Philly Fed Manufacturing Index hit a three-month high. Later on, Fed chair Bernard Bernanke will deliver a speech in Washington. The sole Canadian release, Foreign Securities Purchases, improved sharply and beat the estimate.

US Unemployment Claims looked sharp, dropping slightly to 327 thousand, very close to the estimate of 326 thousand. This was welcome news after last week's shocking Non-Farm Payrolls. Meanwhile, the Philly Fed Manufacturing Index continues to move higher. The indicator jumped to 9.4 points, up from 7.0 points a month earlier. This strong reading beat the estimate of 8.8 points.

Weak inflation levels in the US remain a concern, as this is an indication of an underperforming economy. This was underscored by Core CPI, which posted a weak gain of just 0.1%. On Tuesday, the Producer Price Index posted a gain of 0.4%, reversing directions after three consecutive declines. On Wednesday, Chicago Fed President Charles Evans said that the low rate of U.S. inflation is “both puzzling and worrisome,” and enough reason to maintain low interest rates, even if the employment picture continues to brighten.

The Bank of Canada released its quarterly Business Outlook Survey earlier this week, and the report showed that Canadian businesses were more optimistic in Q4 about investment and hiring compared to Q3. At the same time, companies dealing with the domestic market were less confident than those that rely on the global economy, which has shown improvement. Meanwhile, Canadian employment numbers looked awful last week, as Employment Change tumbled to -45.9 thousand, erasing a strong gain of 21.6 thousand a month earlier. This was nowhere near the estimate of 14.4 thousand. The unemployment rate, which had hovered at 6.9% for three straight readings, jumped to 7.2%. The dismal figures came on the heels of weak numbers from Building Permits and the Ivey PMI. If Canada continues to produce weak numbers, the loonie could soon find itself on the other side of the key 1.10 line.

USD/CAD for Thursday, January 16, 2014

Forex Rate Graph 21/1/13

USD/CAD January 16 at 16:00 GMT

USD/CAD 1.0924 H: 1.0962 L: 1.0905

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0652 1.0783 1.0852 1.1000 1.1094 1.1319

  • USD/CAD has edged lower in Thursday trading. The pair dropped to a low of 1.0905 early in the North American session.
  • 1.0852 continues to provide support. This is followed by a support level at 1.0783.
  • 1.1000 is the next line of resistance. This line has some breathing room as the US dollar has posted modest losses. This is followed by 1.1094, which has remained intact since September 2009.
  • Current range: 1.0852 to 1.1000

Further levels in both directions:

  • Below: 1.0852, 1.0783, 1.0652, 1.0573 and 1.0502
  • Above 1.1000, 1.1094 and 1.1319 and 1.1496

OANDA's Open Positions Ratio

USD/CAD ratio is pointing to gains in Thursday trading. This is not reflected in the pair's movement, as the Canadian dollar has posted gains. USD/CAD is made up of a majority of short positions, indicating a trader bias towards the Canadian dollar continuing to move to higher ground.

The Canadian dollar has posted limited gains, shrugging off strong US employment and manufacturing data on Thursday. The pair is steady in the North American session.

USD/CAD Fundamentals

  • 13:30 Canadian Foreign Securities Purchases. Estimate 7.21B. Actual 8.66B.
  • 13:30 US Core CPI. Estimate 0.1%. Actual 0.1%.
  • 13:30 US CPI. Estimate 0.3%. Actual 0.3%.
  • 13:30 US Unemployment Claims. Estimate 327K. Actual 326K.
  • 13:30 US Treasury Secretary Jack Lew Speaks.
  • 14:00 US TIC Long-Term Purchases. Estimate 42.3B. Actual -29.3B.
  • 15:00 US Philly Fed Manufacturing Index. Estimate 8.8 points. Actual 9.4 points.
  • 15:00 US NAHB Housing Market Index. Estimate 58 points. Actual 56 points.
  • 15:30 US Natural Gas Storage. Exp. -296B. Actual -287B.
  • 16:10 US Fed Chair Bernard Bernanke Speaks.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Source: USD/CAD - Slight Losses Despite Solid U.S. Unemployment Claims