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Monday, November 03, 2014

USD/CAD – Slight Gains as Manufacturing PMI Improves

The Canadian dollar is showing slight losses on Monday, as the pair trades just above the 1.13 line in the North American session. In the US, ISM Manufacturing PMI improved to 59.0 points. The sole Canadian release is a speech in Toronto from BoC Governor Stephen Poloz.

US releases started off the weak on a positive note as ISM Manufacturing PMI improved to 59.0 points, a strong improvement from the previous release of 56.6 points. On Friday, UoM Consumer Sentiment continued its upward trend, improving to 86.9 points. This beat the estimate of 86.4 points. Meanwhile, Canadian GDP posted a decline of 0.1%, pointing to weak economic growth. It was the indicator’s first decline since January.
It was another solid performance from US GDP on Thursday, which posted a strong gain of 3.5% in Q3, ahead of the estimate of 3.1%. Although this was short of the Q2 reading of 4.0%, the two readings mark the strongest six-month gain we’ve seen in ten years. Unemployment Claims increased slightly to 287 thousand, slightly higher than the previous reading of 284 thousand. However, the four-week average remains at multi-year lows, pointing to an improving labor market.
The US dollar posted strong gains on Wednesday, boosted by a hawkish Federal Reserve policy statement. The Fed said that the labor market is strengthening and inflation remains on target, although it did note that the labor market participation rate remains low. As expected the Fed completed the taper of its QE3 program. The asset-purchase program was initially started in 2008, at the height of the economic crisis, in order to boost a weak US economy. The termination of the QE is a symbolic step which is a vote of confidence from the powerful Fed that the US economy is on the right track.

USD/CAD for Monday, November 3, 2014

USD/CAD November 3 at 15:45 GMT
USD/CAD 1.1307 H: 1.1322 L: 1.1263

USD/CAD Technical
S3 S2 S1 R1 R2 R3
1.1004 1.1124 1.1278 1.1414 1.1493 1.1669

  • USD/CAD was uneventful in the Asian session. The pair broke below support at 1.1278 in European trade but recovered. The Canadian dollar remains under pressure in the North American session.
  • 1.1278 is a weak support level and could see further action during the day. 1.1124 is stronger.
  • 1.1414 is a strong resistance line.
  • Current range: 1.1278 to 1.1414
Further levels in both directions:
  • Below: 1.1278, 1.1124, 1.1004, 1.0961 and 1.0865
  • Above: 1.1414, 1.1493, 1.1669 and 1.1723

OANDA’s Open Positions Ratio
USD/CAD ratio is almost unchanged on Monday. This is not consistent with the pair’s movement, as the US dollar has posted modest gains. The ratio has a majority of short positions, indicating trader bias towards the Canadian dollar reversing direction and moving to higher ground.

USD/CAD Fundamentals
  • 14:45 US Final Manufacturing PMI. Estimate 56.1 points. Actual 55.9 points.
  • 15:00 US ISM Manufacturing PMI. Estimate 56.5 points. Actual 59.0 points.
  • 15:00 US Construction Spending. Estimate +0.8%. Actual -0.4%.
  • 15:00 US ISM Manufacturing Prices. Estimate 58.3 points. Actual 53.5 points.
  • All Day – US Total Vehicle Sales. Estimate 16.6M.
  • 15:30 BoC Governor Stephen Poloz Speaks.

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