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Markets eye Canadian job report, US inflation

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The Canadian dollar has extended its losses today. USD/CAD is trading at 1.2743, up 0.35% on the day.

Thursday saw the US dollar gives its Canadian cousin a spanking, as USD/CAD jumped 1.13%, its highest daily gain this year. A rise in US Treasury yields helped boost the US dollar, as the 10-year yield remains above 3%. As well, US unemployment claims disappointed, rising to 229 thousand. This was higher than the previous release of 202 thousand and above the estimate of 210 thousand. The rise in claims was not massive, but nonetheless has fed into the market’s nervousness over the US economy, and the result was a drop in risk appetite which sent the Canadian dollar tumbling lower.

It could be a busy end to the trading week, with Canada’s employment report and US inflation on today’s schedule. Canada’s job numbers for May are expected to be solid – the economy is projected to have created 30.0 thousand new jobs, up from 15.3 thousand in April. The unemployment rate is forecast to remain unchanged at 5.2%.

All eyes on US inflation

The highlight of the week will be US inflation for May. Headline inflation is expected at 8.3% (unchanged), while Core CPI is forecast to fall to 5.9%, down from 6.2%. If inflation does indeed drop, there will likely be voices proclaiming that the long-sought inflation peak is finally here. It would, however, be premature to assume that inflation is on a downswing based on one reading alone. Still, there is plenty of anticipation around the inflation release, such that it could be a binary outcome for USD/CAD – if inflation outperforms, Fed hiking expectations will rise. If, however, inflation drops, we could see a move to sell US dollars.

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USD/CAD Technical

  • USD/CAD is testing resistance at 1.2703. Above, there is resistance at 1.2812
  • There is support at 1.2628 and 1.2519

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.

Kenny Fisher

Kenny Fisher



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