The Canadian dollar has reversed directions on Friday and has recorded slight losses. Currently, USD/CAD is trading at 1.2801, down 0.19% on the day. Traders should be prepared for stronger movement from the pair in today’s North American session, with the release of key job numbers on both sides of the border (13:30 GMT).
Will US nonfarm payrolls surge?
US Nonfarm payrolls are one of the most important economic indicators and will be closely monitored. The street consensus for January is for a small gain of 85 thousand new jobs, after a dismal reading of -140 thousand in December. However, what is creating a buzz and speculation that the actual reading could be much higher is the ADP Nonfarm Payroll report, which was released earlier this week. That report showed a gain of 174 thousand, crushing the estimate of 48 thousand. In recent months ADP reports have been a reliable indicator of the trend in job creation, and if that holds true in the upcoming release, nonfarm payrolls could be stronger than forecast. An unexpectedly strong NFP would be bullish for the US dollar.
Canada will release Employment Change at the same time as US NFP, but the forecast is for a second straight decline, with an estimate of -43.5 thousand. As well, Canada’s unemployment rate is expected to rise to 8.9%, up from 8.6%. If these estimates prove accurate, then the Canadian dollar could be in for a rough day.
Another important release that could affect the movement of USD/CAD in the North American session is Canada Ivey PMI (15:00 GMT). The index dropped sharply to 46.7 in December, down from 52.7 beforehand. The estimate for January stands at 49.5, just shy of the neutral 50-level which separates contraction from expansion.
- USD/CAD faces resistance at 1.2879. Above, there is resistance at 1.2977
- The first line of support is at 1.2684. This is followed by support at 1.2587
- The pair is putting downward pressure on the 50-day moving average (MA), which is at 1.2784. A daily close below this line is a signal of a technical bearish signal.
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/
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