USD/CAD - Steady After Strong ADP Job Numbers

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

By Kenny Fisher

USD/CAD remains quiet in Wednesday trading, as the pair trades in the low-1.10 range in Wednesday's North American session. The Canadian dollar has showed some surprising strength, gaining about two cents in the past week. In economic news, ADP Nonfarm Payrolls posted sharp gains. There are no Canadian releases on Wednesday.

The first US employment release of the week met high expectations, as ADP Nonfarm Payrolls jumped to 191 thousand, up from 139 thousand a month earlier. This practically matched the estimate of 192 thousand. The markets will get a good look at the US employment picture in the next few days, with Unemployment Claims, the Unemployment Rate and NFP still to come.

Canadian inflation has been persistently weak, but Raw Materials Price Index surprised the markets on Tuesday with a huge gain of 5.7%, crushing the estimate of 2.3%. This was the third straight gain for the index and its best showing since April 2011. Is inflation on the rise in Canada? Better inflation numbers would indicate a stronger economy and could give a boost to the Canadian dollar. The week started on a high note as GDP bounced back after a decline in January, posting a healthy gain of 0.5%. This edged above the estimate of 0.4%. This is the best showing we've seen from GDP since last August, and has helped the Canadian dollar rally against its US counterpart.

Earlier in the week, Fed chair Janet Yellen said that inflation and employment levels needed to improve considerably, and the Federal Reserve would continue to provide monetary stimulus for some time. Currently, the Fed is purchasing $55 billion in assets under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence. At the same time, the Federal Reserve has stated that it has no plans to raise interest rates until sometime in 2015.

USD/CAD for Wednesday, April 2, 2014

Forex Rate Graph 21/1/13

USD/CAD April 2 at 13:10 GMT

USD/CAD 1.1034 H: 1.1042 L: 1.1004

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.0852 1.0906 1.1000 1.1094 1.1177 1.1319
Click to enlarge
  • USD/CAD remains quiet in Wednesday trading.
  • On the downside, the key line of 1.1000 is providing weak support. There is stronger support at 1.0906, which is protecting the 1.09 level.
  • 1.1094 is the next resistance line. This is followed by 1.1177.
  • Current range: 1.1000 to 1.1094

Further levels in both directions:

  • Below: 1.1000, 1.0906, 1.0852 and 1.0775
  • Above: 1.1094, 1.1177, 1.1319, 1.1496 and 1.1639

OANDA's Open Positions Ratio

USD/CAD ratio is almost unchanged on Wednesday, continuing the trend we saw at the start of the week. The ratio has a majority of open long positions, indicating a trader bias to USD/CAD reversing its downward direction.

USD/CAD is trading in the low-1.10 range on Wednesday. Will the Canadian dollar resume its rally and push towards the key 1.10 line? The pair is steady in the North American session.

USD/CAD Fundamentals

  • 12:15 US ADP Nonfarm Employment Change. Estimate 192K. Actual 191K.
  • 14:00 US Factory Orders. Estimate 1.3%. Actual 1.6%.
  • 14:30 US Crude Oil Inventories. Estimate 1.3M.

*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.