USD/CAD - Lower As U.S. Employment Data Slips

 |  Includes: FXC, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

USD/CAD has posted modest losses, as the pair is trading back below the 1.11 line in Tuesday's North American session. It's a quiet day on the release front, with just three releases on the schedule. Today's highlight, US JOLTS Job Openings, lost ground in February and fell short of the forecast. There are no Canadian releases on Tuesday.

US employment numbers remain in the spotlight on Tuesday. US JOLTS Job Openings dropped slightly in February, coming in at 3.97 million. This fell short of the estimate of 4.02 million. Late last week the markets were treated to better news, as Unemployment Claims and Nonfarm Payrolls showed sharp improvement in February. Nonfarm Payrolls, one of the most important economic indicators, jumped to 175 thousand in February, up from 1113 thousand a month earlier. This was well above the estimate of 151 thousand. Unemployment Claims dropped to 323 thousand, a thirteen-week low.

With some solid US employment numbers last week, it's a good bet that the Fed is likely to take its scissors and trim QE next week for the third time since the haircutting began in December. New York Fed President William Dudley stated last week that the threshold to alter the Fed's program to wind up QE was "pretty high". In other words, short of a serious economic downturn in the US economy, we can expect the QE tapers to continue. If all goes well, the Fed plans like to wrap up QE by the end of 2014.

Canadian releases started the week on the right foot. Housing Starts improved to 192 thousand, up from 180 thousand a month earlier. This edged above the estimate of 190 thousand. On Friday, Employment Change looked awful, posting its second decline in the past three releases. The indicator came in at -7.0 thousand, way off the estimate of +16.9 thousand. There was no change to the Unemployment Rate, which remains at 7.0%. The Canadian dollar responded to the weak employment news by coughing up 100 points on Friday.

USD/CAD for Tuesday, March 11, 2014

Forex Rate Graph 21/1/13

USD/CAD March 11 at 15:10 GMT

USD/CAD 1.1083 H: 1.1131 L: 1.1078

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0852 1.0906 1.10 1.1094 1.1177 1.1319
Click to enlarge
  • USD/CAD is down slightly in Tuesday trading. The pair dropped below the 1.11 level in the European session.
  • 1.1094 has reverted to a resistance role. It is a weak line which could see further activity during the day. This is followed by 1.1177.
  • 1.10, a key line, continues to provide support. Next is support at 1.0906, protecting the 1.09 level.
  • Current range: 1.1000 to 1.1094

Further levels in both directions:

  • Below: 1.1000, 1.0906, 1.0852 and 1.0783
  • Above: 1.1094, 1.1177, 1.1319, 1.1496 and 1.1639

OANDA's Open Positions Ratio

USD/CAD ratio is posting gains in short positions, continuing the trend we saw to start the week. This is consistent with what we are seeing from the pair, as the US dollar has lost ground. The ratio has a majority of short positions, indicating trader bias towards the loonie moving higher.

The pair is back below 1.11 on Tuesday, and the US dollar remains under pressure in the North American session.

USD/CAD Fundamentals

  • 11:30 US NFIB Small Business Index. Estimate 95.3 points. Actual 91.4 points.
  • 14:00 US JOLTS Jobs Openings. Estimate 4.02M. Actual 3.97M.
  • 14:00 US Wholesale Inventories. Estimate 0.5%. Actual 0.6%.

*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.