USD/CAD – Canadian Dollar Edges Lower Ahead of Canadian, US Job Data

USD/CAD is almost unchanged in the Friday session, as the pair trades slightly above the 1.34 line. On the release front, job numbers are in the spotlight on both sides of the border. Canada releases Employment Change and the unemployment rate, while the US releases three key events – Nonfarm Payrolls, Average Hourly Earnings and the unemployment rate.

Weak oil prices in the first quarter of 2017 have weighed on the Canadian dollar, which has been unable to make any inroads against its US counterpart. US crude continues to trade just above the $50 level, as the tug-of-war between OPEC and the US producers continues. The glut of oil worldwide remains as higher US production has offset OPEC cuts. US Crude Inventories continue to show surpluses, most of which have been higher than the forecast. This was the case again last week, with US crude inventories posting a strong gain of 1.6 million, surprising the markets which had forecast a decline. The indicator has posted 12 surpluses in the last 13 weeks, which has helped keep a lid on higher oil prices throughout 2017.

There were no surprises from the Federal Reserve policy minutes, which were released on Wednesday. The minutes had a slightly hawkish tone, as policymakers noted upside risk to the US economy. However, policymakers remain divided on whether inflation will rise to the Fed target of 2.0% percent. The minutes also stated FOMC members were in favor of taking steps to trim the $4.5 trillion balance sheet, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. However, the Fed is unlikely to make any moves in this front till later in the year, as President Trump’s fiscal policy remains a big question mark. So what’s next for the Federal Reserve? According to the CME’s Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent. . Fed policymakers appear divided on how many more times the Fed will press the rate trigger. Last week, FOMC member Eric Rosengren called for three more hikes, saying the Fed should raise rates in June, September and December. Rosengren said that employment and inflation levels were close to the Fed’s targets, and that three additional hikes were needed in order to prevent the US economy from overheating. However, a majority of FOMC members are in favor of just two more hikes this year.

Fed Minutes Show a Divided Central Bank on Trump and Inflation

USD/CAD Fundamentals

Friday (April 7)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 174K
• 8:30 US Unemployment Rate. Estimate 4.7%
• 8:30 Canadian Employment Change. Estimate 5.7K
• 8:30 Canadian Unemployment Rate. Estimate 6.7%
• 10:00 Canadian Ivey PMI. Estimate 56.3
• 10:00 US Final Wholesale Inventories. Estimate 0.1%
• 12:15 US FOMC Member Esther Dudley Speech
• 15:00 US Consumer Credit. Estimate 14.2B

*All release times are GMT

USD/CAD for Friday, April 7, 2017

USD/CAD April 7 at 8:50 EST

Open: 1.3419 High: 1.3430 Low: 1.3383 Close: 1.3419

USD/CAD Technical

• USD/CAD edged lower in the Asian session and is choppy in European trade
• 1.3371 is providing support
• 1.3461 is the next resistance line

Further levels in both directions:

• Below: 1.3371, 1.3253, 1.3120 and 1.3006
• Above: 1.3461, 1.3551 and 1.3672
• Current range: 1.3371 to 1.3461

OANDA’s Open Positions Ratio

USD/CAD ratio is showing slight movement towards long positions. Currently, short positions have a majority (59%), indicative of trader bias towards USD/CAD breaking out and moving lower.

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