10 Jul 2015
USD/CAD outlook into Canadian employment data release – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities offer the outlook and expect moves into USD/CAD into the employment data release, expecting a push towards 1.2780 on a soft number, while a strong print will shift focus to 1.2650 and 1.2610.
Key Quotes
“Focus for USDCAD today will be the June employment report where we expect the loss of 15k jobs (market: 10k) after a blockbuster +59k print in May. Whatever the outcome of today’s employment report we do not think it changes prospects of a Bank of Canada cut next week as the data that has unfolded over the past two weeks with GDP, a mixed business survey and an ugly trade balance–not to mention a wider output gap—are enough to compel the Bank to provide an additional “insurance” cut. If we do get a weak print however, we think it improves the optics of a cut.”
“Given the way USDCAD has traded over the past two weeks and market pricing in the front-end (~50/50 chance for a cut next week in OIS), we think there is an asymmetric risk to a reaction of a positive employment report. In the event of a positive surprise to the data, we view 1.2650 as the initial support level followed by the 1.2610 area. We think those levels should hold and attract dip buyers. A breach below 1.2610 could expose downside potential as much as 1.2550, but given the degree of skepticism in interpreting monthly swings in Canadian employment, these levels should hold.”
“Conversely, the realization of a bad jobs print should put 1.2780 level to test—this has proven to be a solid resistance level this week.”
Key Quotes
“Focus for USDCAD today will be the June employment report where we expect the loss of 15k jobs (market: 10k) after a blockbuster +59k print in May. Whatever the outcome of today’s employment report we do not think it changes prospects of a Bank of Canada cut next week as the data that has unfolded over the past two weeks with GDP, a mixed business survey and an ugly trade balance–not to mention a wider output gap—are enough to compel the Bank to provide an additional “insurance” cut. If we do get a weak print however, we think it improves the optics of a cut.”
“Given the way USDCAD has traded over the past two weeks and market pricing in the front-end (~50/50 chance for a cut next week in OIS), we think there is an asymmetric risk to a reaction of a positive employment report. In the event of a positive surprise to the data, we view 1.2650 as the initial support level followed by the 1.2610 area. We think those levels should hold and attract dip buyers. A breach below 1.2610 could expose downside potential as much as 1.2550, but given the degree of skepticism in interpreting monthly swings in Canadian employment, these levels should hold.”
“Conversely, the realization of a bad jobs print should put 1.2780 level to test—this has proven to be a solid resistance level this week.”