USD/CAD - Loonie Steady As Canadian Trade Balance Improves

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

By Kenny Fisher

USD/CAD edged closer to the key 1.10 line, as the Canadian dollar has posted modest gains in Thursday trading. On the release front, Canadian Trade Balance posted a surplus of three straight declines. South of the border, US Trade Balance worsened and missed the estimate. Unemployment Claims also missed the forecast for the first time in five tries, while ISM Non-Manufacturing PMI improved in March.

There was some good news for the loonie as Canada posted a trade balance of $0.3 billion, reversing a string of declines and beating the estimate of $0.2 billion. It's been a good week for Canadian releases, as GDP and RMPI surpassed their estimates. It was a different story in the US, as the trade deficit swelled to $42.3 billion, its worst showing since June. The estimate stood at -$39.1 billion. Trade balance is closely linked to currency demand, as foreigners need to purchase the domestic currency in order to pay for that country's exports.

US Unemployment Claims disappointed, as the key indicator jumped to 326 thousand last week, up from 311 thousand in the previous release. This missed the estimate of 319 thousand. Earlier in the week, ADP Nonfarm Payrolls jumped to 191 thousand, up from 139 thousand a month earlier. This practically matched the estimate of 192 thousand. We'll get a look at the Unemployment Rate and NFP on Friday.

Earlier this 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 Thursday, April 3, 2014

Forex Rate Graph 21/1/13

USD/CAD April 3 at 15:00 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 is showing little movement in Thursday trading.
  • On the downside, the key line of 1.1000 continues to provide 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 pointing to gains in long positions on Thursday. The ratio has a strong majority of open long positions, indicating a trader bias to USD/CAD reversing its downward direction.

USD/CAD is steady in Thursday trading. Will the pair drop below the 1.10 line? The pair is stable in the North American session.

USD/CAD Fundamentals

  • 12:30 Canadian Trade Balance. Estimate 0.2B. Actual 0.3B.
  • 11:30 US Challenger Job Cuts. Actual -30.2%.
  • 12:30 US Trade Balance. Estimate -38.3B. Actual -42.3B.
  • 12:30 US Unemployment Claims. Estimate 319K. Actual 326K.
  • 13:45 US Final Services PMI. Estimate 55.5 points. Actual 55.3 points.
  • 14:00 US ISM Non-Manufacturing PMI. Estimate 53.5 points. Actual 53.1 points.
  • 14:30 US Natural Gas Storage. Estimate -75B. Actual -74B.

*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.