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James Hyerczyk
USDCAD

Weekly Analysis and Recommendations:

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.

 

Weekly USD/CAD

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

 
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