USDCAD pops higher in subdued markets


USDCAD, H1

Canadian yields have ticked marginally lower relative to opening levels amid a lack of domestic data, rumours of a NAFTA deal in the near term and the upcoming Fed Jackson Hole event (Poloz is in a panel on Saturday). The 2-year is at 2.112% from 2.114%, the 5-year has slipped to 2.200% from 2.205% and the 10-year is at 2.253% from 2.264%. The muted movement in yields has left the 2-year nearly 0.5 bps higher relative to Wednesday’s close, while the 5-year and the 10-year are flat on that basis.

US initial jobless claims fell another 2k to 210k in the week ended August 18, after sliding 2k to 212k in the August 11 week (revised from 212k). It’s a third consecutive weekly decline and highlights the tight labor market. We’re just off the 208k level from mid-July, which was the lower going back to December 1969. This number will carries a little more weight since it corresponds to the BLS employment survey week. The 4-week moving average dropped to 213.75k from the prior 215.5k. Continuing claims declined 2k to 1,727k in the August 11 week, after falling 31k to 1,729k previously (revised from 1,721k).

The upshot for USDCAD was a tick up in the last hour as it breaks over its 200 moving average and R2 at 1.3060. If the break of the 200 moving average can be sustained then next Resistance is 1.3080 (the upper Bollinger band and the daily R3). R1 (1.3025) has proved support today, during the London session, next support is the daily Pivot around the psychological 1.3000. RSI is rising and remains positive at 67.00.

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