The Canadian dollar has ticked higher in the Friday session, after two straight losing sessions. Currently, USD/CAD is trading at 1.2837, down 0.12% on the day. On the release front, the sole Canadian indicator is Housing Starts, which is expected to soften to 214 thousand. In the US, the spotlight is on job numbers. Nonfarm payrolls is expected to soften to 198 thousand, while wage growth is forecast to rebound with a gain of 0.3%. The unemployment rate, which stands at 4.1%, is expected to remain unchanged. We’ll also get a look at consumer confidence, with the release of UoM Consumer Sentiment. The markets are predicting that the indicator will improve to 99.0 points.
November’s ADP nonfarm payrolls managed to beat expectations earlier this week, but the reading was sharply lower than the October release. Will the official nonfarm payrolls follow suit? The markets are bracing for a soft NFP, with a forecast of 200 thousand, down from 261 thousand in the previous release. Wage growth has been stubbornly low, despite a strong labor market and assurances from Fed policymakers that inflation and wages will move upwards. The markets are expecting some good news on Friday, with Average Hourly Earnings expected to gain 0.3%. The October reading of 0.0% was a disappointment, missing the forecast of 0.2%.
The Canadian dollar is down close to 1.0% this week, but there was some good news on Thursday, as key Canadian indicators beat their estimates. Building Permits jumped 3.5%, beating the estimate of 1.7%. Ivey PMI came in at 63.0, above the forecast of 62.7 points, indicating of strong expansion. These readings have helped the Canadian dollar stem a rough week, which has been marked by mostly downward movement against the US dollar.
There were no surprises from the Bank of Canada earlier in the week, as policymakers maintained the benchmark rate at an even 1.00%. Still, the Canadian dollar lost ground after the rate announcement, which was dovish in tone. The Bank said that there was slack in the labor market, and investors took this as a sign that a January rate hike was less likely. Another uncertainty facing the BoC is NAFTA, as a protectionist-minded US administration has threatened to torpedo the free-trade agreement unless Canada and Mexico make major concessions. An additional headache for the BoC is that the Federal Reserve is expected to raise rates in December and January. The BoC will have to follow suit with a raise of its own, or risk watching the Canadian dollar head lower against the greenback.
Friday (December 8)
- 8:15 Canadian Housing Starts. Estimate 214K
- 8:30 US Average Hourly Earnings. Estimate 0.3%
- 8:30 US Nonfarm Employment Change. Estimate 198K
- 8:30 US Unemployment Rate. Estimate 4.1%
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 99.0
*All release times are GMT
*Key events are in bold
USD/CAD for Friday, December 8, 2017
USD/CAD, December 8 at 7:50 EDT
Open: 1.2853 High: 1.2869 Low: 1.2839 Close: 1.2837
USD/CAD was flat in the Asian session and has ticked lower in the European session
- 1.2757 is providing support
- 1.2860 has switched to a resistance role after small losses by USD/CAD on Friday. It is a weak line
- Current range: 1.2757 to 1.2860
Further levels in both directions:
- Below: 1.2757, 1.2630, 1,2494, and 1.2368
- Above: 1.2860, 1.3015 and 1.3161
OANDA’s Open Positions Ratio
USD/CAD ratio continues to show movement towards short positions. Currently, short and long positions are almost an even split, indicative of a lack of trader bias as to what direction USD/CAD will move next.
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