USD/CAD – Canadian dollar unchanged, investors await employment data

USD/CAD is unchanged in the Thursday session. Currently, the pair is trading at 1.3588, up 0.03% on the day. In the U.S., the focus will be on employment numbers for the remainder of the week. ADP nonfarm payrolls are expected to remain unchanged at 179 thousand, while unemployment claims are forecast to continue climbing, with an estimate of 220 thousand. On Friday, the U.S. will post nonfarm payrolls and wage growth, and Canada publishes employment change and the unemployment rate. As well, ISM Manufacturing PMI is forecast to dip to 57.7 points.

The Canadian dollar endured a rough December, and it’s doubtful if January will bring much relief. Turmoil on global stock markets has soured risk appetite and made minor currencies like the Canadian dollar less attractive. The volatility in U.S. markets was especially pronounced last week, as stocks plunged but then rebounded. There is widespread concern that the global trade war will continue to take a bite out of the global economy, which could mean more headwinds for the Canadian dollar, a commodity currency.

After four rate hikes in 2018, the Federal Reserve will be drastically easing up on raising rates in 2019. Just a few months ago, there was heady talk of three or four rate hikes in 2019, but the Fed made an abrupt U-turn, saying the “neutral rate range” had been reached. Analysts expect one rate hike in 2019, as this year’s hikes and the global trade war have lessened the pace of expansion in the U.S. economy. According to the CME Group, the likelihood that the Fed will stay on the sidelines in January and March stands at 98% and 93%, respectively. This dovish stance from the Fed could weigh on the dollar in the coming months.

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USD/CAD Fundamentals

Thursday (January 3)

• 7:30 US Challenger Job Cuts. Actual 35.3%
  
• 8:15 US ADP Non-Farm Employment Change. Estimate 179K
• 8:30 US Unemployment Claims. Estimate 220K
• 10:00 US ISM Manufacturing PMI. Estimate 57.7
• 10:00 US ISM Manufacturing Prices. Estimate 57.9
• All Day – US Total Vehicle Sales. Estimate 17.2M

Friday (January 4)

• 8:30 Canadian Employment Change. Estimate 6.8K
• 8:30 Canadian Unemployment Rate. Estimate 5.7%
• 8:30 Canadian RMPI
• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 178K
• 8:30 US Unemployment Rate. Estimate 3.7%
• 10:15 US Fed Chair Powell Speaks

*All release times are EST

*Key events are in bold

USD/CAD for Thursday, January 3, 2019

USD/CAD, January 3 at 7:55 EST

Open: 1.3584 High: 1.3655 Low: 1.3579 Close: 1.3588

USD/CAD Technical

USD/CAD edged higher in the Asian session but has surrendered these gains in European trade

• 1.3552 is a weak support line
• 1.3696 is the next resistance line
• Current range: 1.3552 to 1.3696

Further levels in both directions:

• Below: 1.3552, 1.3461, 1.3383 and 1.3292
• Above: 1.3696, 1.3793 and 1.4001

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