USD/CAD Fundamental Forecast – September 12, 2016

The USD/CAD added 23 points to trade at 1.2957 ahead of today’s Canadian jobs report. Not sharing a release date with NFP, its usual monthly time slot, could provide more of an impact to the loonie.

Historically, Canada’s employment reports can be a real hit or miss, somewhat similar to Aussie job reports. Last month the Canada lost a surprising -31.2k jobs on a +10k gain forecast. The current market consensus is forecasting a gain of +16k jobs in August. Investors need to take note of the revisions.

A day after the Bank of Canada (BoC) kept the benchmark rate unchanged that started a sell off of the Canadian currency the central bank deputy Timothy Lane delivered a speech that displayed the two speeds present in the economy. Despite the efforts from the government and the central bank the Canadian economy is still the story of the Resource based economy and the rest. The drop in energy prices has hit the resource based sectors and despite a lower currency exports to the U.S. have not grown as expected.

The talk by Deputy Governor Lane clearly outlined the impact of energy prices in employment, retail sales and housing resales. In all three the energy producing provinces were negative, while the rest of Canada was overall positive. The job market in Canada has not fully recovered from the effects of the 2008 crisis. Despite missing the most severe impacts the Canadian economy did not enjoy a steady recovery as crude prices started to tumble. The end of the commodity super cycle came at a bad time, once the shield of the economy it became its biggest headache and in turned forced the BoC to cut rates twice in 2015.

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Upcoming Economic Events that you should be monitoring:

 September 12, 2016

Government Bond Auctions

Date Time Country Auction

Sep 12 11:30 Germany Eur 2bn Mar 2017 Bubill

Sep 12 13:00 Norway Details of bond auction on Sep 14

Sep 13 11:00 Netherlands Eur 2-3bn 0% Jan 2022 DSL

Sep 13 11:10 Italy Holds bond auction

Sep 14 11:05 Norway Holds bond auction

Sep 14 11:30 UK 0.125% 2046 I/L Gilt

Sep 14 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

Sep 15 10:30 Spain Holds bond auction

Sep 15 11:03 Sweden Holds I/L bond auction

Sep 15 11:50 France Holds bond auction