USD/CAD – Loonie flash plummets on weaker jobs report

  • Canada Jan Net Jobs -88,000 From Dec
  • Canada Jan Net Jobs Forecast At +10,000
  • Canada Jan Full-Time Jobs +49,000; Part-Time -137,000
  • Canada Jan Avg Hourly Wages +3.3% From Year Ago
  • Canada Labor Force -73,700 In Jan From Dec
  • Canada Jan Participation Rate At 65.5% Vs 65.8% In Dec
  • Canada’s unemployment rate ticked up last month after hitting a 10-year low in December, as both the public and private sectors shed workers.

    The Canadian economy lost a net -88k jobs in January on a seasonally adjusted basis. The market expectations were for an increase in employment of +10k.

    Canada’s unemployment rate ticked a tad higher to +5.9% in January, up from a revised reading of +5.8% in December.

    The loonie took it on the chin immediately, moving from C$1.2601 to an intraday dollar high of C$1.2694. The CAD has since pared all of those losses and then some, trading atop of C$1.2600.

    The CAD bears will have been disappointed with the initial price action as there were looking for better USD levels to sell their longs. A plethora of dollar sell orders had been scattered atop of the psychological C$1.2700 handle.The USD/CAD is trading lower on the day at C$1.2585.

    USD/CAD -Canadian Dollar in Holding Pattern Ahead of Key Job Reports

    The Canadian dollar has ticked higher in the Friday session. Currently, the pair is trading at 1.2609, up 0.05% on the day. On the release front, the focus is on Canadian employment indicators, with the release of Employment Change and the unemployment rate.

    This week’s market selloff has boosted the US dollar, at the expense of the Canadian dollar and most other major currencies. The Canadian dollar has dropped 1.4% this week, and is down 2.5% in February, erasing the gains we saw in January. Interestingly, the catalyst for the current turbulence has been solid economic data in the US, namely, improved payrolls and wage growth reports. This has raised concerns of inflation, which could lead to a quicker pace of rate hikes from the Federal Reserve. This sentiment has sent the bond markets higher, while weighing on global stock markets.

    After some spectacular readings, Canada’s economy is expected to show more modest job creation in January, with an estimate of 10.3 thousand. The unemployment rate is forecast to edge up from 5.7% to 5.8%. If these predictions are within expectations, the Canadian dollar could gain some ground on Friday, and end a tough week on a positive note.

     

    USD/CAD Fundamentals

    Friday (February 9)

    • 8:30 Canadian Employment Change. Estimate 10.3K
    • 8:30 Canadian Unemployment Rate. Estimate 5.8%
    • 10:00 US Final Wholesale Inventories. Estimate 0.2%

    *All release times are GMT

    *Key events are in bold

     

    USD/CAD for Friday, February 9, 2018

    USD/CAD, February 9 at 7:15 EDT

    Open: 1.2603 High: 1.2616 Low: 1.2585 Close: 1.2607

     

    USD/CAD Technical

    S3 S2 S1 R1 R2 R3
    1.2190 1.2351 1.2494 1.2630 1.2757 1.2855

    USD/CAD has showed little movement in the Asian and European sessions

    • 1.2494 is providing support
    • 1.2630 is a weak resistance line
    • Current range: 1.2494 to 1.2630

    Further levels in both directions:

    • Below: 1.2494, 1.2351, 1.2190 and 1.2060
    • Above: 1.2630, 1.2757 and 1.2855

    OANDA’s Open Positions Ratio

    USD/CAD ratio is unchanged in the Friday session. Currently, long positions have a majority (53%), indicative of trader bias towards USD/CAD continuing to move upwards.

    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.

    USD/CAD – Canadian Dollar Steady as Housing Reports a Mixed Bag

    The Canadian dollar has ticked higher in the Thursday session. Currently, the pair is trading at 1.2562, down 0.07% on the day. On the release front, Canadian housing numbers were mixed. The New Housing Price Index edged lower to 0.0%, shy of the estimate of 0.1%. This was the first time the index failed to post a gain since January 2015. There was better news from Housing Starts, which was almost unchanged at 216 thousand, beating the forecast of 211 thousand. In the US, unemployment claims dropped down to 221 thousand, well below the estimate of 232 thousand. The 4-week average claims dropped to 224,500, its lowest level since 1973. On Friday, Canada releases key employment data – Employment Change and the unemployment rate.

    The US dollar has posted broad gains this week, boosted by strong volatility in the stock markets. On Monday, the Dow Jones posted its biggest one-day loss, and US markets have pointed downwards for much of the week. The catalyst for the stock market slide is concern that inflation could rise in the US, which in turn would trigger additional rate hikes from the Fed. This would make the US dollar more attractive against other currencies. With investor risk appetite sharply lower, the Canadian dollar is under strong pressure. Earlier in the day, USD/CAD touched a high of 1.2598, its highest level since late December.

    Canadian indicators disappointed on Tuesday. Canada’s trade deficit widened from C$2.5 billion to C$3.2 billion, well above the estimate of C$2.3 billion. The export sector has been steady, but uncertainty over NAFTA is a dark cloud over the economy, and exports could suffer if the trilateral free trade pact is not renewed. The US has threatened to leave the pact if the Canada and Mexico do not agree to major concessions, such as increasing the percentage of US content in auto parts produced under NAFTA. Elsewhere, Canadian Ivey PMI continues to point to expansion, but slowed to 55.2, down from 60.4 in the previous release. This was well off the forecast of 60.7 points.

    USD/CAD Fundamentals

    Thursday (February 8)

    • 8:15 Canadian Housing Starts. Estimate 211K. Actual 216K
    • 8:30 Canadian NHPI. Estimate 0.1%. Actual 0.0%
    • 8:30 US Unemployment Claims. Estimate 236K
    • Tentative – US Mortgage Delinquencies
    • 10:30 US Natural Gas Storage. Estimate -116B
    • 12:45 BoC Senior Deputy Governor Carolyn Wilkins Speaks
    • 13:01 US 30-year Bond Auction

    Friday (February 9)

    • 8:30 Canadian Employment Change. Estimate 10.3
    • 8:30 Canadian Unemployment Rate. Estimate 5.8%

    *All release times are GMT

    *Key events are in bold

    USD/CAD for Thursday, February 8, 2018

    USD/CAD, February 8 at 8:00 EDT

    Open: 1.2668 High: 1.2598 Low: 1.2550 Close: 1.2590

    USD/CAD Technical

    S3 S2 S1 R1 R2 R3
    1.2190 1.2351 1.2494 1.2630 1.2757 1.2855

    USD/CAD inched lower in the Asian session and has posted small gains in European trade

    • 1.2494 is providing support
    • 1.2630 is the next resistance line
    • Current range: 1.2494 to 1.2630

    Further levels in both directions:

    • Below: 1.2494, 1.2351, 1.2190 and 1.2060
    • Above: 1.2630, 1.2757 and 1.2855

    OANDA’s Open Positions Ratio

    USD/CAD ratio is showing  movement towards short positions. Currently, long positions have a majority (53%), indicative of trader bias towards USD/CAD continuing to move upwards.

    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.