USD/CAD with advance on US initial jobless claims and ISM manufacturing reports

US dollar gained strength, advancing to session highs against its Canadian counterpart on Thursday, following the release of upbeat initial jobless claims and ISM Manufacturing reports out of the United States.

USD/CAD reached the highest point for todays session at 1.0323 at 13:07 GMT, after which consolidation followed at 1.0310. Support for the pair was likely to be received at July 29th low, 1.0253, while resistance was to be encountered at July 22nd high, 1.0364.

Earlier today the Department of Labor in the United States released its weekly report to show that the number of people, who filed for unemployment assistance in the country, decreased to a five-year low during the week ended on July 27th 2013, giving another piece of evidence that labour market in the states was improving. Initial jobless claims fell by 19 000 to 326 000, which was the lowest number of claims since the beginning of 2008, considerably outstripping initial estimates that claims will reach 345 000. During the preceding week the number of new claims was revised up to 345 000 from 343 000 previously. In the summer period jobless claims tend to experience volatility because of the temporary closure of some factories and schools in the country. The indicator, which lacks these seasonal effects, or the average number of claims in the past four weeks, dropped by 4 500 to 341 250.

Additionally, the final reading of Markit US Manufacturing PMI recorded an advance to 53.7 in the month of July, beating estimates of a value of 53.1, after in June it stood at 53.2. The ISM Manufacturing in the United States, in the mean time, reached a two-year high. Business activity in manufacturing rose to 55.4 in July, up from 50.9 in June, marking the highest point since August 2011. Experts had expected that the indicator will show a much lesser increase to 52.0. One of the components of this index, the new orders sub index added 6.4 pct to 58.3 in July, the index, gauging output, added 11.6 pct, hitting a nine-year high at 65.0, while the index of employment advanced 5.7 pct to 54.4. All these values, above the critical 50.0 level, showed that activity has increased.

Meanwhile, investors were expecting the non-farm payrolls report from the US, scheduled on Friday, after the positive ADP Employment Change, reported yesterday. It showed that the private sector in the United States added 200 000 new job positions in the month of July, surpassing preliminary estimates of 180 000 jobs.

Upon the release of these economic indicators, the euro lost 0.2% against the US dollar, as EUR/USD slid to 1.3220, the current session low. The common currency was trading lower against the Canadian dollar as well, with EUR/CAD erasing 0.17% to 1.3652 at 14:35 GMT. Today at its meeting the European Central Bank did not introduce any changes to its policy due to slowly improving economic conditions. The bank kept its base interest rate at a record low level of 0.50%.

On the other hand, GBP/CAD cross was steady, trading at 1.5640, inching up 0.04% at 14:37 GMT.