Dollar/CAD traded sideways for another week. Is the pair about to resume its rise or is it due for a turnaround? Canada’s jobs report stands out. Here are the highlights and an updated technical analysis for USD/CAD.
The Canadian economy grew by 0.4% q/q in February, better than expected and encouraging after the economy squeezed in January. The Ivey PMI also shot higher to 71.5 points, providing optimism for future growth. Bank of Canada Governor Stephen Poloz repeated his cautious words and did not add anything new. Oil prices helped the loonie stabilize amid a stronger US Dollar. The greenback continued rising despite an unimpressive jobs report: 164K positions gained and a slowdown in wage growth to 2.6% y/y. Nevertheless, the Fed remains on course to raise rates in June and its May decision did not hint otherwise.
Updates:
USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
Timothy Lane talks: Monday, 8:00. The BOC Deputy Governor will be attending an event in Portugal and will also answer questions after his speech. Lane may comment on the recent GDP report as well as other aspects of the Canadian economy. The BOC is looking to raise rates but is in no rush whatsoever.
Housing Starts: Tuesday, 12:15. The first housing figure during the week is a relatively stable one. Housing starts are projected to drop from 225K to 218K in April, but this would still be within the averages. Some are worried about the sector, especially as prices in Toronto have dropped sharply.
Building Permits: Wednesday, 12:30. Building approvals are already more volatile. After falling by 2.6% in February, a rise is likely in the report for March. Significant turnarounds are quite common.
NHPI: Thursday, 12:30. The New Home Price Index completes the series of housing figures. The indicator fell by 0.2% last time and is now expected to rise at the same scale. Another fall may trigger worries about the sector.
Canadian jobs report Friday, 12:30. Canada publishes its April jobs report one week after the US, giving it the full stage. The Canadian labor market enjoyed a robust rise in jobs back in March: 32.2K. This time, a more moderate increase is on the cards: 19.5K, closer to regular averages. The BOC is expecting a return to normal levels of growth after a weak first quarter. The unemployment rate is projected to remain unchanged at 5.8%.
Carolyn Wilkins talks: Friday, 13:10. The Senior Deputy Governor of the BOC speaks in Toronto and has the opportunity to respond to the jobs report. In the past, Wilkins provided the first hint that the BOC was on the way to begin raising rates. Her words are closely watched.
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