Canadian Employment Jumps 93.2K, Unemployment Rate Falls to 7.9%
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GBP/USD: The trade deficit in the U.K. widened more than expected for the month of June as imports rose 2.4 percent to 29.5 billion pounds, while exports advanced a mere 0.2 percent to 21.5 billion pounds. Today’s figures comes on the back of a weak euro which has reduced the costs of imports in Britain from its neighboring euro zone. Going forward, the trade deficit in the U.K. will likely remain under water for the rest of the year as governments in the 16 member euro area scale back stimulus measures to fight their ballooning budget deficits. In turn, the euro zone may face a mild downturn, which may increase imports in Britain as the European Union is a key trading partner for the U.K. This fact also weighs on British exports as European imports is likely to remain subdued until the end of the year. It is also worth noting that the demand of imports faces major headwinds in the second half of the year as consumers scale back spending amid uncertainty in the labor market paired with tight credit conditions. To discuss this and other topics, please visit the GBP/USD forum.
USD/CAD: Employment in Canada unexpectedly jumped 93.2K during the month of June from 24.7K the previous month, exceeding economists forecast for a rise of 20.0K. At the same time, the unemployment rate fell to 7.9 percent from 8.1 percent in May. As similar to the labor force figures in May, most of the jobs created were in the private sector. Indeed, Canada has been producing jobs for the sixth consecutive month. Immediately following the improved data, the USD/CAD slipped below the 200-day SMA and now looks poised to test the 100-day moving average / 23.6 percent Fibonacci retracement on the 5/25, 6/21 downswing. Ahead of the release, the pair was at the crossroads of 1.04 as this level stood to be the 38.2 percent Fibonacci retracement and the 200 day SMA. All in all, today’s figures provide an improved outlook for the region as business confidence seems to continue its northern journey. To discuss this and other topics, please visit the USD/CAD forum.
Written by Michael Wright, Currency Analyst
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