Dollar/CAD dropped sharply on the deal between the US and Canada and also the weakness of the US Dollar. Will the trend continue? Canada’s jobs report stands out. Here are the highlights and an updated technical analysis for USD/CAD.
The US and Mexico struck a deal and Canada is set to join. The C$ advanced on the news, even though Canada may eventually be excluded from the deal. The greenback suffered general losses as markets remained optimistic in general. Canada is set to make concessions in order to secure a deal.
Updates:
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
Manufacturing PMI: Markit’s manufacturing purchasing managers’ index for Canada came out at 56.9 points in July, reflecting good, yet not outstanding growth levels in the sector. A better number could be seen now, on optimism for a NAFTA deal.
Trade Balance: Wednesday, 12:30. Canada had a smaller trade deficit than expected in June, only 0.6 billion. We may see a wider deficit this time. Trade data is politically sensitive amid trade talks.
Labor Productivity: Wednesday, 12:30. Productivity growth is problematic in many developed economies. Canada’s figures dropped by 0.3% in Q1 after a fall beforehand. The see-saw may continue.
Rate decision: Wednesday, 14:00. The Bank of Canada raised the interest rate in its July meeting, as they had telegraphed well in advance. The surprise back then was that they maintained their hawkish bias, despite repeatedly warning about the uncertainty resulting in US tariffs. This time, Governor Poloz and his colleagues are unlikely to move on the rates, leaving it to a meeting that also consists of a press conference. Nevertheless, they will express themselves in the statement which will likely discuss trade and also recent GDP numbers.
Building Permits: Thursday, 12:30. The housing sector has seen some rocky times, with soaring prices hit by regulation. A drop of 2.3% was recorded in June. July could see a bounce back.
Jobs report Friday, 12:30. Canada reported a whopping gain of 54.1K jobs in July, but this concealed a loss of full-time jobs and a leap in part-time jobs. In addition, wages disappointed by reverting back down after two good months. The unemployment rate stood at 5.8%. In August, we can expect a more modest increase in positions.
Ivey PMI: Friday, 14:00. The Richard Ivey Business School showed impressive optimism about the economy. The score of 61.8 in July reflects robust growth. We may see a slide in the report for August.
