The Canadian dollar has shown some strength on Thursday, after range-trading for much of the week. Early in the North American session, the pair is trading at 1.3107, up 0.47% on the day. On the fundamental front, Canada’s trade deficit narrowed to C$2.5 billion in June, which was smaller than the deficit of C$3.2 billion in May.
US employment claims drop below the 1-million mark
US jobless claims dropped for a second straight week, falling to 881 thousand. This was down from 1.006 million and below the forecast of 955 thousand.
Employment numbers will remain in focus on Friday, as both Canada and the US release job creation numbers. In the US, nonfarm payrolls are projected to slow to 1.385 million. There is some nervousness on the part of investors ahead of the release, since the ADP nonfarm payroll release showed a gain of only 428 thousand, well off the estimate of 1.25 million. If we see a repeat (poor) performance from the official NFP report, the markets could give a thumbs-down to the US dollar on Friday. Analysts are also braced for a soft wage growth report, with an estimate of 0.0%. The previous release came in at 0.2%.
- 1.3116 is under pressure in resistance. Close by, there is resistance at 1.3139
- 1.3022 is the first support line, protecting the symbolic 1.30 level. The next support level is the round number of 1.3000
- The 10-day MA, which has been tested since mid-July, remains relevant. If the pair can break above this line, it would be a bullish signal
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