The USD/CAD closed slightly higher for the week. Falling crude oil prices and a stagnant precious metals market contributed to the strength, but the positive close was mostly related to a flat Canadian Labour Force Survey and a strong U.S. Non-Farm Payrolls report.
According to Statistics Canada, the Labour Force Survey failed to move the Canadian Dollar. The report showed that Canada’s economy added about 6,600 jobs in July. Canada’s national unemployment rate also came in at 6.8 percent for the sixth month in a row.
The response to the U.S. Non-Farm Payrolls report was also muted since it contained no surprises, coming in closely in line with economists’ expectations. The government reported that the U.S. economy added 215,000 jobs in July. The unemployment rate remained at 5.3 percent for the second straight month.
The U.S. jobs report probably brought the Federal Reserve closer to its first interest rate hike since 2006, but the price action hardly suggests confidence. Analysts raised their expectations for a September rate hike from 47 percent to 55 percent. Currently, the market is 100 percent certain of an interest rate hike before the end of the year.
Looking ahead to this week, falling oil prices should continue to underpin the USD/CAD, but traders should watch for a possible short-covering rally as the Forex pair nears the psychological $40.00 level.
Monday’s session could feature volatility because of scheduled speeches by two FOMC members. FOMC Member Fischer is scheduled to speak at 7:15 a.m.ET, followed by FOMC Member Lockhart at 9:00 a.m. ET and 12:25 p.m. ET. Their comments could move the market especially if they discuss the timing of the Fed rate hike. Additionally, Thursday’s U.S. Retail Sales report could shed some light on the strength of the economy.
Technically overbought conditions make the Forex pair ripe for a possible short-term top, but this is not likely to become a trend changing event, but rather an easy way to relieve some of the upside pressure that has been building in anticipation of a September rate hike. Any short-term break is likely to be short-lived and a new opportunity to re-enter the long side at more favorable prices.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.
Reports to Watch This Week:
Date Time Curr Events Forecast Previous
|
Mon Aug 10 |
7:15am ET |
USD |
FOMC Member Fischer Speaks |
9:00am ET
USD
FOMC Member Lockhart Speaks
12:25pm ET
USD
FOMC Member Lockhart Speaks
Tue Aug 11
8:30am ET
USD
Prelim Nonfarm Productivity q/q
1.6%
-3.1%
USD
Prelim Unit Labor Costs q/q
-0.1%
6.7%
11th-13th
USD
Mortgage Delinquencies
5.54%
Wed Aug 12
10:00am ET
USD
JOLTS Job Openings
5.42M
5.36M
10:30am ET
USD
Crude Oil Inventories
-4.4M
Thu Aug 13
8:30am ET
CAD
NHPI m/m
0.3%
0.2%
USD
Core Retail Sales m/m
0.5%
-0.1%
USD
Retail Sales m/m
0.5%
-0.3%
USD
Unemployment Claims
272K
270K
USD
Import Prices m/m
-1.0%
-0.1%
Fri Aug 14
8:30am ET
CAD
Manufacturing Sales m/m
2.1%
0.1%
USD
PPI m/m
0.1%
0.4%
USD
Core PPI m/m
0.1%
0.3%
9:15am ET
USD
Capacity Utilization Rate
78.0%
78.4%
USD
Industrial Production m/m
0.3%
0.3%
10:00am ET
USD
Prelim UoM Consumer Sentiment
93.5
93.1
