The US dollar rose against the Canadian dollar yesterday following reports of an unexpected decline in unemployment claims. The Canadian GDP data was also better than expectations, but not exceptionally impressive. This enabled the market to bet on the greenback. Overall, the USD/CAD pair rallied from a low of 1.3603 to a high of 1.3720 in the past day.
Statistics Canada reported that the country’s economy expanded 0.10% month-over-month in July, following a 0.10% growth in the preceding month. Economic experts had expected the economy to contract 0.10% in the reported period.
Goods-producing industries grew by 0.50%, partly offset by a 0.1% drop in services-producing industries. Likewise, the mining, quarrying, and oil and gas extraction sectors rose by 1.90% in July, following small decreases in the earlier two months.
The agriculture, forestry, fishing, and hunting sector expanded 3.20% in July, led by a 7.20% rise in crop production. However, the manufacturing sector shrank 0.50% in July, reflecting the third decrease in four months.
Wholesale trade fell by 0.70% in July, a decline for the fifth time in six months. The retail trade industry shrank 1.90% in July, hitting the lowest level since December 2021. Accommodation and food services fell by 1% in July, reflecting the first drop since January. The finance and insurance sector remained unaltered in July, following three successive monthly declines. The public sector grew by 0.40% in July.
According to the US Department of Labor, the country’s first-time unemployment claims fell to 193,000 in the week ended September 24, from 209,000 in the earlier week, which delighted the market, which was expecting an increase in the unemployment claims to 215,000. The reported figure reflects the lowest level since April.
The third estimate provided by the Bureau of Economic Analysis revealed the US GDP shrank 0.60% quarter-over-quarter in the second quarter, subsequent to a 1.60% narrowing in the prior quarter. The second estimate pegged the second-quarter GDP contraction at 0.60%. Economists did not anticipate any variation in the second estimate.
Current-dollar GDP rose by 8.50% (or $508 billion) in the June 2022 quarter to $25.25 trillion. Disposable personal income grew by 5.70% (or $253.30 billion) in the June 2022 quarter. Personal savings stood at $629 billion in the second quarter, while the personal savings rate was 3.40% in the same period.
The upbeat data from both countries are anticipated to keep the USD/CAD pair range-bound in the short term.
The historical price chart shows that the USD/CAD pair is rising after testing the support at 1.3670. The next resistance is projected only near 1.4130. Also, the pair is trading above its 50-day moving average while the RSI indicator is showing a reading above 50. So, we expect the currency pair to continue in an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
