Two trades to watch: USD/CAD, GBP/USD

USD/CAD looks to US & Canadian jobs data. GBP/USD rally continues ahead of the NFP.

Jobs 2

USD/CAD looks to US & Canadian jobs data

USD/CAD lacks direction ahead of the jobs reports from the US and Canada.

The loonie has failed to track oil prices higher across the week. Canada’s main export has risen over 6% this week, while the loonie trades roughly flat against its US counterpart.

That said, the BoC’s more hawkish bias compared to the Federal Reserve could keep bears hopeful of further downside.

Attention is now on the NFP and Canada’s jobs report. In October, Canada saw a blowout jobs report with 108.3k jobs created as such, November’s report is expected to be more muted, with just 5k jobs added. Unemployment is due to tick higher to 5.3%, up from 5.2%.

The BoC’s interest rate decision is next week. Inflation is showing signs of slowing. Weakness in the jobs market could fuel hopes of a less aggressive BoC.

Where next for USD/CAD?

USD/CAD has been trending higher over the past two weeks. However, gains have been capped by the 50 sma. Buyers could look for a rise over 1.3515, the October low, to expose the 1.3570 and the rising trendline at 1.3645.

Sellers could look for a fall below 1.3325, the Friday 25 low, to bring into 1.3220, the November low. A fall below here creates a lower low.

 

usdcad212fxa

GBP/USD rally continues ahead of the NFP

The pound’s rise has been impressive given the dire UK economic outlook. Sterling is capitalizing on the weaker USD. However, it is worth pointing out that the pound is performing well against other major peers.

With inflation at 11.1% and showing few signs of slowing, the BoE could be forced to stick with a more hawkish approach to monetary policy than the Fed, which is set to adopt a more dovish stance from the December meeting.

Attention is now on the US non-farm payroll, which is expected to show 200k jobs were added in November, down from 261k in October and 315k in September.

Unemployment is set to tick higher again to 3.8%, up from 3.7%, and wage growth is set to ticker lower to 4.6%.

Given that Fed Powell has said that the Fed is hiking by 50 basis points in December, the NFP could have a smaller impact than usual on the market. A weak report, or even a goldilocks report of slower wage growth but moderate job creation, could pull the USD lower.

Where next for GBP/USD?

GBP/USD has risen above the 200 sma and is testing resistance at 1.23, the August high. The RSI supports further gains while it remains out of overbought territory. A rise above 1.23 opens the door to 1.2670, the June high.

On the flip side, should sellers successfully defend the 1.23 level, immediate support can be seen at 1.2150, the 200 sma, ahead of 1.20, the psychological level. A move below 1.1740, the mid-November low, could see sellers gain momentum.

 

gbpusd212fx

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account