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  • USD/CAD struggles to justify the upside as crude prices extend recovery.
  • Doubts over any breakthrough from the US-China trade talks weigh the sentiment.
  • Trade/political news can entertain markets ahead of the key data/events.

The USD/CAD pair’s another bounce off 50-DMA seems to lose momentum as the quote seesaws near 1.3230 during early Friday.

News that the US and China are going to meet in October for a restart of the trade negotiations helped commodity-linked currencies on Thursday. However, the US Dollar (USD) later on recovered against its Canadian counterpart after ADP Employment Change raised expectations of an upbeat NFP print. Also adding to the pair’s pullback were dovish statements from the Bank of Canada’s (BOC) policymaker Lawrence Schembri.

Yesterday’s optimism surrounding the US-China trade deal seems to fade off-late as China’s Ambassador to Australia supported harsh comments from Chinese dailies turning down expectations of any breakthrough from the October meeting.

Further, Iran is stepping further away from the Nuclear Deal and the US threatens anyone fueling the Iranian ship offer additional strength to Crude, Canada’s main export.

Moving on, traders will be cautious ahead of the key employment data from the US and Canada for August. While the headlines US Nonfarm Payrolls are likely to weaken to 158K from 164K prior, Canada’s Net Change in Employment bears the consensus of +15.0K against -24.2K prior. It should also be noted that the US Average Hourly Earnings could soften to 3.1% form 3.2% on YoY while likely being unchanged to 0.3% on MoM while no change is expected in 3.7% Unemployment Tate of the US. On the other hand, the Canadian Unemployment Rate could also stay intact at 5.7% but Participation Rate could rise to 65.7% from 65.6% earlier.

Also up in the radar is the US Federal Reserve Chairman Jerome Powell’s speech in Zurich before the Fed policymakers follow usual blackout period ahead of the mid-month monetary policy meeting.

Technical Analysis

August 19,30 low and recent high constitute 1.3250 as immediate key resistance, a break of which can propel prices to 100-day simple moving average (DMA) level of 1.3290. Though, pair’s downside below 50-DMA level of 1.3194 will drag the quote to early-July tops surrounding 1.3150/45.