Canadian Dollar finds a bounce on Thursday, extends meager gains

• Canadian Dollar caught a bid on Thursday, but gains remain limited against USD.
• Canada sees better-than-expected recovery in unemployment claims.
• US Initial Jobless Claims fell, but less than expected; US PMIs loom ahead on Friday.

The Canadian Dollar (CAD) found some room on the high side on Thursday, adding to the week’s thin gains. The CAD is struggling to outperform the US Dollar (USD), which is climbing as US markets return to the fold following a midweek holiday that kept US exchanges dark and Greenback trading thin. 

Canada reported a comparatively steep cut in the number of Canadians taking unemployment benefits. US Initial Jobless Claims also eased but less than expected, driving the four-week average higher. Canadian Retail Sales and US Purchasing Managers Index (PMI) figures are slated for Friday to wrap up the trading week.

Daily digest market movers: Jobless benefits figures drive market sentiment, CAD shifts higher

• Canadian Employment Insurance Beneficiaries Change declined 2.8% MoM in April, sharply below the previous 0.1% increase and the steepest decline in Canadian jobless benefits claimants since November 2022.
• US Initial Jobless Claims also declined from a week earlier but less than expected. New unemployment benefit seekers eased to 238K for the week ended June 14, less than the previous 243K but more than the expected 235K.
• US Initial Jobless Claims are still riding higher than the four-week average, which ticked up to 232.75K from 227.25K.
• Philadelphia Fed Manufacturing Survey backslid to 1.3 in June, missing the forecasted increase to 5.0 from the previous 4.5 as economic concerns continue to weigh on business sentiment.
• Canadian Retail Sales due on Friday are expected to recover to 0.7% MoM in April, up from the previous -0.2% decline.
• Friday’s US PMI will close out the trading week, with markets expecting a slight shift lower. The Manufacturing PMI is forecast to push down to 51.0 from 51.3, and the Services component is expected to slide to 53.7 from 54.8.
   

Technical analysis: Canadian Dollar bounces, but remains trapped at key levels

The Canadian Dollar (CAD) is gaining ground across the board on Thursday, climbing nearly eight-tenths of one percent against the battered Swiss Franc (CHF), the day’s worst-performing currency. The CAD is also up over one-half of one percent against the Pound Sterling (GBP) and the Japanese Yen (JPY), but gains against the US Dollar remain limited as the Canadian Dollar trades within a tenth of a percent against the Greenback.

USD/CAD remains mired in near-term congestion at the 1.3700 handle, but momentum is tilting in favor of bears looking to push the Greenback lower against the Canadian Dollar. The pair is drifting steadily lower from a near-term supply zone above 1.3760, with eyes set on the recent swing low into 1.3680.

Daily candles are on pace to make a return to technical support from a confluence in a rough rising trendline and the 50-day Exponential Moving Average (EMA) at 1.3676, but a long-term price floor is baked in at the 200-day EMA rising into the 1.3600 handle. USD/CAD is down a full percent from the year’s peaks near 1.3850 but is still up a healthy 3.5% from 2024’s opening bids near 1.3250.
 

USD/CAD hourly chart

USD/CAD daily chart