USD/CAD remains stalled below the 1.3700 area despite the risk-off market

The Dollar remains buoyed near recent highs but is failing to consolidate above 1.3700.
Strong Canadian employment figures and higher Oil prices are supporting the Loonie.
CPI figures from the US and Canada might boost the pair’s volatility on Tuesday.

Guillermo Alcala FXStreet

The US Dollar features a moderately positive trend against its Canadian counterpart, with technical indicators on bullish ground and the risk-off mood supporting the safe-haven USD, but the pair remains unable to consolidate above the 1,3700 resistance area.

Trump has proposed 35% tariffs on Canada, in addition to 30% tariffs on the European Union and Mexico, which would build on the 50% tariffs on Canadian steel and aluminum announced earlier in June. These measures are likely to weigh on the Canadian economy unless a better deal is reached before the August 1 deadline.

Strong Canadian employment and higher Oil prices are supporting the CAD

On the other hand, data from Canada beat expectations last week, with the unemployment rate declining against expectations on the back of a sharp increase in net employment. These figures strengthen the view that the Bank of Canada will keep interest rates on hold after its July 30 meeting, which is providing some support for the loonie.

Furthermore, Cride prices, Canada's main export, have rallied about $2 from Friday’s lows and are 6% above the late June lows, favoured by news that the OECC+ might be about to pause its supply hikes from October. This is another source of support for the CAD.

The economic docket is light today, and investors are likely to wait and see ahead of consumer inflation figures from both the US and Canada, which are due on Tuesday. These numbers are likely to give further clues about the monetary policies of their respective central banks and might boost USD/CAD’s volatility.

Economic Indicator

Unemployment Rate

The Unemployment Rate, released by Statistics Canada, is the number of unemployed workers divided by the total civilian labor force as a percentage. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labor market and a weakening of the Canadian economy. Generally, a decrease of the figure is seen as bullish for the Canadian Dollar (CAD), while an increase is seen as bearish.

Economic Indicator

Net Change in Employment

The Net Change in Employment released by Statistics Canada is a measure of the change in the number of people in employment in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending and indicates economic growth. Therefore, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.

Why it matters to traders?

Canada’s labor market statistics tend to have a significant impact on the Canadian dollar, with the Employment Change figure carrying most of the weight. There is a significant correlation between the amount of people working and consumption, which impacts inflation and the Bank of Canada’s rate decisions, in turn moving the C$. Actual figures beating consensus tend to be CAD bullish, with currency markets usually reacting steadily and consistently in response to the publication.

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

GBP/USD trims gains; back to 1.3450-ish

The persistent weakness hurting the Greenback lends support to the British Pound and the rest of the risk-linked assets, sending GBP/USD to new two-day tops past 1.3480 on Wednesday. Indeed, Cable advances for the second day in a row helped by the constant optimism around a potential US-Iran deal.

EUR/USD clings to gains near 1.1550

EUR/USD builds on Tuesday’s advance and confronts the area of multi-week highs in the 1.1550-1.1560 band on Wednesday. The continuation of the pair’s recovery comes once again on the back of the renewed selling pressure on the US Dollar, always in response to diminishing geopolitical tensions.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

Crypto Today: Bitcoin, Ethereum advance while XRP lags amid US-Iran deal optimism

Bitcoin (BTC) hovers near $64,000 at the time of writing on Wednesday, buoyed by a marginal improvement in crypto sentiment amid growing optimism that the United States (US) and Iran could potentially reach an agreement to open the Strait of Hormuz this week. Ethereum (ETH) mirrors Bitcoin’s neutral-to-bullish outlook, trading toward $1,900.

Taking out the lines in the sand

Good Day... And a Wonderful Wednesday to you! Well, just as I suspected, my beloved Cardinals' bats went silent last night in the Bronx, and they lost 0-2... The Yankees' bats were exactly a murderer's row, but they hit 2 homers and won. I said yesterday that the song : Just Once In My Life, could be the Cardinals' song after hitting 5 home runs the previous night!

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.