News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/WQLZ1X7gIY
  • but the next major point in my view to monitor will be 52.76 - at least in the short term.
  • #Brent having broken above the pre-OPEC drop off at 45.51 is a huge deal considering it failed to crack resistance there in August (leading to the invalidation of "uptrend 2") and the psychological significance of that level https://t.co/LkEyRxFhnq
  • The New Zealand Dollar looks poised to extend its push higher against its haven-associated counterparts on robust economic data and a less dovish stance from the RBNZ. Get your $NZD market update from @DanielGMoss here:https://t.co/vytr4OR1Jy https://t.co/ZcxEUWIm8O
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @JohnKicklighter here: https://t.co/1oeXWEsJkb https://t.co/x8uyOHLtgE
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears..Get your $USDCHF market update from @FxWestwater here:https://t.co/yqJbbhAWiu https://t.co/CaMR0Vqd1m
  • The US Dollar lost ground to most ASEAN currencies as Emerging Market assets climbed despite US economic woes. USD/INR is eyeing third-quarter Indian GDP at the end of the week. Get your market update from @ddubrovskyFX here:https://t.co/urDN2b5Nwd https://t.co/toSDbVZCSi
  • The global stock market can be categorized into specific groups or ‘stock market sectors’. Organizing the vast number of stocks in this way helps traders to view assets in a more manageable way. Get your stock market sectors basics here: https://t.co/5gbiHmY8yl https://t.co/mQ6ty8Yalv
  • The Euro looks poised to continue gaining ground against haven-associated currencies and may reverse higher against the British Pound in the near term. Get your #Euro market update from @DanielGMoss here:https://t.co/oRIHju7ZzK https://t.co/dIEErVzWEY
  • Gold and silver prices have come under significant pressure recently. However, this correction lower could prove short-lived as price analysis hints at a reversal higher. Get your $XAUUSD market update from @DanielGMoss here:https://t.co/K1qL0fsGwy https://t.co/tRfjlN6X22
FX Week Ahead - Top 5 Events: July Canada Jobs Report & USD/CAD Rate Forecast

FX Week Ahead - Top 5 Events: July Canada Jobs Report & USD/CAD Rate Forecast

2019-08-03 01:30:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Canada Jobs Report Overview:

  • The July Canada jobs report is due out on Friday, August 9 at 12:30 GMT, and the data are expected to show another solid pickup in the labor market.
  • USDCAD prices have recovered in recent weeks as global risk appetite and crude oil prices have taken a beating.
  • Retail traders have remained net-short since July 23 when USDCAD traded near 1.3135; price has moved 0.5% higher since then.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

08/09 FRIDAY | 12:30 GMT | CAD Gross Domestic Product (JUL)

Amidst a deteriorating backdrop for global risk appetite, the commodity currencies have come under significant pressure in recent weeks. With the US-China trade at the forefront of market participants’ minds, oil prices have fallen back, weighing on the Canadian Dollar. If the world’s two largest economies remain on a collision course, it’s likely that the commodity currencies trade in synchrony.

As such, the July Canada jobs report due out on Friday is unlikely to have a significant impact on Bank of Canada interest rate expectations, and thus, the Canadian Dollar. But for the otherwise softening global growth backdrop, there may not be much of a case for the BOC to follow the Federal Reserve or Reserve Banks of Australia and New Zealand in cutting rates.

The Canadian labor market is looking for a rebound in July after a soft June. Bloomberg News consensus forecasts call for the July Canada jobs report to show that the economy added 15K jobs after losing -2.2K in May. Nevertheless, 2019 has been a good year for the Canadian jobs market, averaging 41.3K jobs added per month as the unemployment rate has come down to 5.5%, where it due to stay on hold.

Bank of Canada Interest Rate Expectations (August 2, 2019) (Table 1)

boc rate expectations, cad rate expectations, bank of canada rate cut odds, boc rate cut odds, boc rate hike odds, boc rate

The fact of the matter is that the resilient Canadian labor market is giving the BOC to keep rates on hold for the foreseeable future. The September BOC meeting only has a 10% chance of a 25-bps rate cut, according to overnight index swaps. There is a coin flip’s chance of a rate cut by the end of the year, and a 60% chance of a 25-bps rate cut by January 2020.

Pairs to Watch: CADJPY, EURCAD, USDCAD

USDCAD Technical Analysis: Daily Timeframe (July 2018 to August 2019) (Chart 1)

usdcad price, usdcad technical analysis, usdcad chart, usdcad price forecast, usdcad price chart

The synchronous selloff in the commodity currencies has provoked USDCAD to break its downtrend from the May and June swing highs. Bullish momentum has certainly perked up in recent days, with price comfortably above the daily 8-, 13-, and 21-EMA envelope. Slow Stochastics are in overbought territory while daily MACD is just making its way through the signal line with a bullish crossover.

Nevertheless, the bullish piercing candle around the July Fed meeting has seen little meaningful follow through, insofar as both the August 1 and 2 daily candles produced shooting stars/inverted hammers in the March 20/June 7 swing low area around 1.3238/51. Among the commodity currencies, given that the BOC is less likely than either the Reserve Bank of Australia or the Reserve Bank of New Zealand to ease significantly in 2019, if there is a rebound in risk appetite, it’s likely that the Canadian Dollar will be a main beneficiary.

IG Client Sentiment Index: USDCAD Rate Forecast (August 2, 2019) (Chart 2)

igcs, ig client sentiment index, igcs usdcad, usdcad price chart, usdcad price forecast, usdcad technical analysis

USDCAD: Retail trader data shows 38.6% of traders are net-long with the ratio of traders short to long at 1.59 to 1. In fact, traders have remained net-short since July 23 when USDCAD traded near 1.3135; price has moved 0.5% higher since then. The number of traders net-long is 9.3% lower than yesterday and 36.0% lower from last week, while the number of traders net-short is 5.8% lower than yesterday and 11.4% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDCAD-bullish contrarian trading bias.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES