Canada’s employment report in focus at 13:30 BST
Canadian employment currently sits at 5.5% which is its lowest level since June 2019. Yet it if meets expectations and drops to 5.4%, it will be its lowest level in at least 48 years. Expectations for another bumper employment change are low as the consensus sits around 80k, which is a far cry from the 336.6k it printed in February. Still, now concerns of nuclear war have (thankfully) subsided compared to this time a month ago, another strong report could tip the scale back towards a 50-bps hike from the BOC (Bank of Canada) this month.
USD/CAD hovers beneath resistance ahead of CA employment
Whilst volatility for currency and commodity markets was low overnight, we saw an extension of yesterday’s moves. This means the dollar is trading higher (and euro lower) for a seventh day. We highlighted a potential bull flag on GBP/AUD in today’s Asian Open report, and a similar setup is forming on GBP/CAD, although we’d need to see a break above the 1.6473 high to invalidate a bearish channel and confirm a flag.
On Tuesday we highlighted the potential for USD/CAD to mean revert on the daily chart and it has not disappointed, rising for two consecutive days and reaching out upper bullish target. We can see on the four-hour chart that prices are consolidating near the highs as the monthly pivot point, weekly R1 and 200-bar eMA provide resistance.
As markets already pricing in a 50-bps hike from the BOC this month then a surprisingly soft employment report for Canada could see the pair break convincingly higher (and may also provide the more volatile move). Yet if the employment report comes in stronger than expected, USD/CAD could pull back from these highs. And that makes the 1.2580 – 1.2610 region a pivotal level to watch.
Further out, given the rebound from 1.24 following its strong bullish pinbar on Tuesday, we may see this one break higher eventually, regardless of today’s outcome.
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