- Canada’s trade surplus is at a 14-year high, boosted by high oil prices in May.
- Investors expect employment data from the US and Canada.
- Bulls have resurfaced at the 30-SMA level.
Today’s USD/CAD forecast is bullish as the collapse of oil prices hurts the Canadian dollar. The Canadian dollar is back to being battered by the dollar on Friday. This was, however, not the case yesterday after Canada’s upbeat economic data.
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Canada’s trade surplus went up in May to a 14-year high, mainly boosted by energy exports. However, with the recent collapse in commodity prices, this surplus might pull back in June and July. The Canadian dollar lost ground on Friday, and the US dollar returned stronger.
USD/CAD key events today
USD/CAD investors are in for a volatile day as both countries are expected to release employment data. The nonfarm payrolls in the United States are expected to contract from a previous 333K to 240K. This jobs report has a lot of weight as it will show how the US labor market is holding up amid high interest rates. It might therefore inform the Fed’s monetary policy. The unemployment rate is expected to hold at 3.6%.
Canada will also be releasing a jobs report later today. Investors expect the unemployment rate to remain at 5.1%, while employment changes are expected to drop.
Finally, the Commitment of Traders report for the US dollar, and the Canadian dollar will come out today. This report will show speculative net positions for each currency, informing investors about the current market sentiment.
USD/CAD technical forecast: Bulls might retest 1.30686
The 4-hour chart shows the price bouncing off the 30-SMA support. This move comes after the price found resistance at 1.30686, and bears came in to push it back to the SMA. At this point, the bias is bullish as the price is trading above the SMA and the RSI is above 50. If bulls keep up the momentum, the price might retest 1.30686.
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There is some resistance at 1.30003, which is not only a psychological level but also a critical resistance level. This level stopped the price on the 23rd of June and might do it again. If the price fails to break above this level, we might see it break below the 30-SMA and retest the 5th July support at 1.28512.
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Saqib Iqbal
