USD/CAD is unchanged on Thursday, as the pair trades just below the 1.34 line. On the release front, US unemployment claims is expected to show little change, with an estimate of 257 thousand. Another key release, ISM Non-manufacturing PMI is expected to dip to 56.2 points. The sole Canadian event is a speech from BoE Governor Stephen Poloz at an event in Oshawa, Ontario. On Friday, the US will release additional employment numbers, led by Nonfarm Employment Change. The indicator is expected to climb to 174 thousand. Canada will also release Employment Change and the unemployment rate for October, with the economy expected to have shed 10 thousand jobs.
As expected, the Federal Reserve maintained the benchmark interest rate at 0.25% at Wednesday’s policy meeting. However, the tone of the policy statement was slightly hawkish message with regard to a December hike. The Fed said that the economy has improved and the employment market remains strong. The Fed also noted that inflation was moving towards its target of 2 percent. Weak inflation has long been the Achilles heel of the US economy, but this obstacle to a rate hike appears to have been removed. The policy statement hinted strongly at a December hike, noting that “the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives”. Two FOMC members voted to raise rates immediately, Fed Presidents Esther George and Loretta Mester. With a December hike currently priced at over 70 percent, market sentiment towards the US dollar should remain positive and we could see gains against other major currencies.
Canada’s GDP posted a slight gain of 0.2% in August, matching the forecast. This was considerably softer than the 0.5% gain in July, but the loonie has held steady this week, as the markets appear relieved that the economy continued to expand. The Bank of Canada held interest rates at 0.50% in October, but remains cautious and downgraded its economic forecast. Canada will release Employment Change on Friday, and the markets are braced for a decline of 10.0 thousand. If the market forecast is accurate, the Canadian dollar could quickly change direction and lose ground.
The Federal Reserve is in the spotlight, as the bank concludes a 2-day policy meeting on Wednesday. The markets are expecting the Fed to remain on the sidelines, given that the US presidential election takes place next week. The rate statement will be carefully monitored, as analysts comb for hints about the extent of support among FOMC members ahead of the crucial December meeting. There was positive news from the US consumer front on Monday, as Personal Spending rebounded with a 0.5% gain in September, after a flat reading of 0.0% in August. Gold responded to the reading with slight losses. This release comes on the heels of a disappointing consumer spending report on Friday, as UoM Consumer Sentiment fell to 87.2 points in October, below expectations and dropping to its lowest level since August 2015.
USD/CAD Fundamentals
Thursday (November 3)
- 7:30 US Challenger Job Cuts
- 8:30 US Unemployment Claims. Estimate 257K
- 8:30 US Preliminary Nonfarm Productivity. Estimate 1.7%
- 8:30 US Preliminary Unit Labor Costs. Estimate 1.6%
- 9:45 US Final Services PMI. Estimate 54.8
- 10:00 US ISM Non-Manufacturing PMI. Estimate 56.2
- 10:00 US Factory Orders. Estimate 0.2%
- 10:30 US Natural Gas Storage. Estimate 55B
Friday (November 4)
- 8:30 Canadian Employment Change. Estimate -10.0K
- 8:30 Canadian Unemployment Rate. Estimate 7.0%
- 8:30 US Average Hourly Earnings. Estimate 0.3%
- 8:30 US Nonfarm Employment Change. Estimate 174K
- 8:30 US Unemployment Rate. Estimate 4.9%
*All release times are EDT
*Key events are in bold
USD/CAD for Thursday, November 3, 2016
USD/CAD November 3 at 8:00 GMT
Open: 1.3395 High: 1.3401 Low: 1.3350 Close: 1.3389
USD/CAD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.3120 | 1.3253 | 1.3371 | 1.3457 | 1.3551 | 1.3648 |
- USD/CAD has shown limited movement in the Asian and European sessions
- 1.3371 was tested earlier in support and is a weak line
- There is resistance at 1.3457
Further levels in both directions:
- Below: 1.3371, 1.3253, 1.3120 and 1.3028
- Above: 1.3457, 1.3551 and 1.3648
- Current range: 1.3371 to 1.3457
OANDA’s Open Positions Ratio
USD/CAD ratio is unchanged in the Thursday session, consistent with the lack of movement from USD/CAD. Currently, short positions command a strong majority (70%), indicative of trader bias towards USD/CAD continuing to move to lower ground.
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.
