Volatility Plagues the USD/CAD Pair but That’s Good News for Binary FX Traders

The North American currency pair, the USD/CAD is on the move once again. The Bank of Canada announced the country’s GDP grew 0.3% in December 2016, above forecasts of 0.2%. The news was announced on Thursday, 2 March 2017. Owing to the positive surprise, the CAD firmed slightly against the greenback. In November 2016, the Canadian economy grew by 0.5%, after being upwardly revised. The good news for Canada is that utilities improved by 3.4%, following 3 successive months of declines. This was largely due to natural gas distribution, electric power, and construction. This data bodes well for the CAD, and inspires confidence in the Canadian economy. Other positive metrics in Canada include the business confidence index at 57.20, Manufacturing PMI at 54.70 and capacity utilization at 81.90.

But that’s only one side of the story – the other side is what is happening with the US economy.

US Economic Performance Overshadows Canadian Optimism

US jobless claims – one of the most important measures of the health of an economy – are at a 44-year low. This means that the total number of Americans seeking unemployment benefits is at its lowest level in almost half a century, down to just 223,000. What is particularly important about this metric is that analysts forecast a figure of 243,000 jobless claims. The previous jobless figure was 242,000.

Naturally, this has boosted the USD, and owing to the size of the US economy, acted in an overweight capacity on the USD/CAD pair to drive it stronger. This is the 104th week in succession that jobless claims have been below the critical 300,000 level. The US unemployment rate has inched slightly higher to 4.80%, from a previous reading of 4.70%. However, the US still has an abysmal labour force participation rate at 62.90%, and it has been that way for quite some time.

How should you trade the USD/CAD given the data?