USD/CAD – Canadian Dollar Trading Sideways, U.S Jobs Numbers Impress

The Canadian dollar is almost unchanged in the Friday session. In the North American session, USD/CAD is trading at 1.2969, up 0.10% on the day. On the release front, Canada releases Manufacturing PMI. In the US, Nonfarm Payrolls jumped to 223 thousand, well above the estimate of 189 thousand. Wage growth improved to 0.3%, edging above the estimate of 0.2%. Later in the day, the U.S releases ISM Manufacturing PMI, which is expected to improved to 58.3 points.

After a brief hiatus, the markets are again facing the nasty reality of a trade war between the U.S. and its major trading partners. On Thursday, the Trump administration made good on its threats and imposed stiff tariffs on the European Union, Mexico and Canada. The EU and Canada fired back quickly, saying they would retaliate with tariffs on U.S products. The U.S had granted all three trading partners a temporary extension, but cited insufficient progress on trade talks as the reason for the tariffs. There are renewed fears that these moves could trigger a global trade war, which could be disastrous for the Canadian economy.

The Canadian dollar has been on a roller coaster this week. The currency dropped sharply on Wednesday but has reversed directions on Thursday after a positive take of the economy from the Bank of Canada. The bank statement noted that inflation was higher than expected and the export sector remained robust. As expected, the bank maintained the benchmark rate at 1.25 percent. Inflation has moved closer to the BoC target of 2 percent and economic growth has been steady, so the BoC will be giving serious consideration to a rate hike this summer. Some analysts are even predicting that the bank will raise rates twice in the second half of 2018.

  Dollar Falls As US Fires First in Trade War

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USD/CAD Fundamentals

Friday (June 1)

• Day 2 – G7 Meetings
• 8:30 US Average Hourly Earnings. Estimate 0.2%. Actual 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 189K. Actual 223K
• 8:30 US Unemployment Rate. Estimate 3.9%. Actual 3.8%
• 9:30 Canadian Manufacturing PMI
• 9:45 US Final Manufacturing PMI. Estimate 56.6
• 10:00 US ISM Manufacturing PMI. Estimate 58.3
• 10:00 US Construction Spending. Estimate 0.8%
• 10:00 US ISM Manufacturing Prices. Estimate 78.1
• 10:00 ISM Manufacturing Prices. Estimate 78.1
• All Day – US Total Vehicle Sales. Estimate 17.0M

*All release times are DST

*Key events are in bold

USD/CAD for Friday, June 1, 2018

USD/CAD, June 1 at 8:55 DST

Open: 1.2956 High: 1.3008 Low: 1.2931 Close: 1.2969

USD/CAD Technical

USD/CAD has broken through two resistance line on Friday. In the Asian session, the pair edged higher before recovering. USD/CAD has been marked by choppy trade in the European session

• 1.2943 is providing support
• 1.3015 is the next resistance line
• Current range: 1.2943 to 1.3015

Further levels in both directions:

• Below: 1.2943, 1.2850, 1.2757 and 1.2614
• Above: 1.3015, 1.3125 and 1.3224

OANDA’s Open Positions Ratio

In the Friday session, USD/CAD ratio is showing long positions with a majority (63%). This is indicative of USD/CAD breaking out and moving higher.

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