Canada’s June employment data to move the Loonie

Canada’s employment data in focus

The USD seems to maintain its bearish tendencies in the FX market while JPY regained some ground as it was rumoured that Japan is expected to encourage pension funds to increase investments in local financial assets, a move that could ease the selling pressure on JPY. The correction higher for JPY eased market worries for a possible market intervention to JPY’s rescue by Japan. In an easy-going Friday, we highlight the release of Canada’s employment data for June. The unemployment rate is expected to remain unchanged at 6.6%, while the employment change figure to drop from 87.8k to 10.0k. Should the actual data show an even looser Canadian employment market we may see the Loonie losing ground, while on the flip side, a possibly tighter than expected Canadian employment market could provide support for the CAD.

US equities markets continue to search for direction

US stock market indexes edged higher yesterday, recovering some ground, yet signals seem to remain mixed for the time being. On the one hand, the advances made by tech shares tend to act bullishly for market psychology, yet a hawkish Fed and fresh US and Iranian strikes in the wider Persian Gulf area tend to weigh on the market sentiment, allowing for a difficult balancing act.

Oil prices are about to end the week in the greens

Oil prices are about to end the week in the green as ongoing worries for the outlook of the situation in the Persian Gulf and the Straits of Hormuz, given the reignition of tensions in the area. Overall, should tensions in the area escalate further, we may see the market worries intensifying and thus oil prices gaining further ground, while should tensions ease, we may see oil prices losing ground.

Gold remains in a sideways motion

Gold’s price remained in relatively tight sideways motion, and we still view the negative correlation of gold’s price with the USD as being active, despite being somewhat hazy this week as the USD seems to remain stable while gold’s price is about to end the week in the reds. A strengthening of the USD could weigh on gold’s price and conversely, any further weakening of the USD could allow gold’s price to advance higher.

Other highlights for today

In today’s European session, we get Germany’s, Norway’s and the Czech Republic’s CPI rates for June. Given the low number of high impact financial releases we may see fundamentals leading the markets today.

Charts to keep an eye out

USD/CAD expressed some bearish tendencies testing the 1.4145 (S1) support line. The RSI indicator despite correcting lower is still pretty high allowing us to maintain our bias for sideways motion between the 1.4145 (S1) and the 1.4255 (R1) resistance line. For a bearish outlook to emerge, we would require the pair to break the 1.4145 (S1) support line clearly and start actively aiming if not reaching the 1.4020 (S2) support level. For a bullish outlook to be adopted, we would require USD.CAD to break the 1.4255 (R1) resistance line and start aiming for the 1.4410 (R2) resistance level.

XAU/USD’s price action edged higher yesterday yet seem to have hit a ceiling at the 4125 (R1) resistance line. The RSI indicator still remains below the reading of 50, implying a lack of a bullish market sentiment that could drive the precious metal’s price higher, hence we tend to expect the sideways motion to continue. Should the bears gain control over XAU/USD’s price we may see it breaking the 4025 (S1) support line, opening the gates for the 3910 (S2) support level. Should the bulls take over we may see XAU/USD’s price breaking the 4125 (R1) resistance line with the next possible target for the bulls being set at the 4220 (R2) resistance level.

Calendar follows

USD/CAD daily chart

• Support: 1.4145 (S1), 1.4020 (S2), 1.3880 (S3).
• Resistance: 1.4255 (R1), 1.4410 (R2), 1.4530 (R3). 

XAU/USD daily chart

• Support: 4025 (S1), 3910 (S2), 3795 (S3).
• Resistance: 4125 (R1), 4220 (R2), 4380 (R3).