The Canadian dollar has edged lower in the Thursday session. Currently, USD/CAD is trading at 1.3214, up 0.27% on the day. On the release front, Canadian Building Permits jumped 1.1%, crushing the estimate of -0.1%. In the U.S, unemployment claims dropped to 203 thousand, beating the estimate of 214 thousand. However, ADP Nonfarm Payrolls disappointed with a reading of 163 thousand. This was well below the forecast of 195 thousand. In the services sector, ISM Non-Manufacturing PMI climbed to 58.5, above the estimate of 56.8 points. On Friday, the focus will be on employment indicators on both sides of the border. Canada releases Employment Change, while the U.S will release three key employment indicators – nonfarm payrolls, wage growth and the unemployment rate.
There were no surprises as the Bank of Canada stayed on the sidelines and maintained the benchmark rate at 1.50%. The Bank raised rates by a quarter-point in July, and has hiked rates four times since last summer. The Bank stated in its rate announcement that policymakers would be “monitoring closely the course of the NAFTA negotiations and other trade policy developments, and their impact on the inflation outlook”. With the Canadian economy performing well and the Fed likely raising rates later this month, there is pressure on the BoC to again raise rates in 2018. However, concerns over NAFTA and global trade tensions have won the day for now, as the BoC took a pass on a rate hike.
The Canadian dollar continues to struggle, having lost 2.2% since August 30. Concerns over the NAFTA talks are weighing heavily on the Canadian dollar. Canada and the U.S have already exchanged tariffs on each other’s products, and Canadian and U.S negotiators are trying to hammer out a trade deal, after a deadline last Friday was missed. In order to reach a new trade agreement with the U.S, Canada will likely have to make some concessions, such as reducing hefty tariffs which protect the Canadian dairy industry. Prime Minister Justin Trudeau has said that no deal is better than a bad deal, but it’s clear that Canada can ill-afford to remain the odd man out, with some 75% of Canadian exports destined for the U.S.
Thursday (September 6)
- 7:30 US Challenger Job Cuts. Actual 13.7%
- 8:15 US ADP Nonfarm Employment Change. Estimate 195K. Actual 163K
- 8:30 Canadian Building Permits. Estimate +1.1%. Actual -0.1%
- 8:30 US Unemployment Claims. Estimate 214K. Actual 203K
- 8:30 US Revised Nonfarm Productivity. Estimate 2.9%. Actual 2.9%
- 8:30 US Revised Unit Labor Costs. Estimate -0.9%. Actual -1.0%
- 9:45 US Final Services PMI. Estimate 55.2. Actual 54.8
- 10:00 US ISM Non-Manufacturing PMI. Estimate 56.8. Actual 58.5
- 10:00 US FOMC Member John Williams Speaks
- 10:00 US Factory Orders. Estimate -0.5%. Actual -0.8%
- 10:30 US Natural Gas Storage. Estimate 60B
- 11:00 US Crude Oil Inventories. Estimate -2.2M
- 14:30 BoC Senior Deputy Governor Carolyn Wilkins
Friday (September 7)
- 8:30 Canadian Employment Change. Estimate 5.1K
- 8:30 US Average Hourly Earnings. Estimate 0.2%
- 8:30 US Nonfarm Employment Change. Estimate 193K
- 8:30 US Unemployment Rate. Estimate 3.8%
- 10:00 Canadian Ivey PMI. Estimate 61.5
*All release times are DST
*Key events are in bold
USD/CAD for Thursday, September 6, 2018
USD/CAD, September 6 at 10:35 DST
Open: 1.3190 High: 1.3222 Low: 1.3187 Close: 1.3214
USD/CAD showed little movement in the Asian session. In European trade, the pair posted small gains but retracted. USD/CAD is steady in the North American session.
- 1.3160 is providing support
- 1.3292 is the next resistance line
- Current range: 1.3160 to 1.3292
Further levels in both directions:
- Below: 1.3160, 1.3292, 1.2970 and 1.2831
- Above: 1.3292, 1.3386, and 1.3547
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