Buck Uncertain Ahead of NFP Report
Data released earlier by Statistics Canada reported that the total value of building permits, which gained 15.3% in February, edged down 7.0% to $6.9 billion in March. March’s residential permits increased for the second consecutive month to the value of $4.4 billion, up 4.8% from February. However, in the non-residential sector, the reading extended its recent decline, registered at $2.4 billion in March, 22.8% lower than the reading in the previous month. Negative data from the real estate market reflects that Canada’s economy is in a slowdown, and any clear signals of a recovery are not yet visible.
In the last several days, a forest fire has broken out in Canada, near the heart of the country’s oil sands region. The raging wildfire caused some setbacks to oil production and is anticipated to stall Canada’s economic growth in the second quarter of 2016. Dependent heavily on the energy market, especially on oil prices, the Canadian Dollar is facing strong downward pressure, as various factors combine to weigh it down.
Later today Canadian labor market data is on the calendar, with muted expectations by the market. The jobs creation number, which was at 40,600 in March, is forecast to post at just 200 positions added last month. The unemployment rate may inch up a little to 7.2%, compared with 7.1% in the previous month.
Meanwhile, the US labor market is also growing at a slower pace than earlier, as indicated by recent data. The number of people claiming for unemployment benefits increased unexpectedly last month, coming in at 274,000. In the month before, jobless claims were at 257,000.
Markets are currently turning all their attention towards the Non-Farm Payrolls report out later today, with an estimate for 203,000 new jobs created during the previous month, 5.6% lower than the March reading of 215,000. An actual reading lower than forecast will contribute towards indications of a slowdown in the world’s largest economy. This may pressurize the greenback lower against its peers.
The dollar index DXY has been witnessing stable movement today, standing at 93.62, down 1.5% from the last close.
Fig. USDCAD D1 Technical Chart
Hitting the support of 1.2574 on May 03, the pair USDCAD has rocketed into the overbought territory as shown on the Stochastics chart. However, the %K line (blue line) has already reversed, preparing to cross the %D line (red line). The bull’s power is about to die down, and the price is expected to pull back after testing the level 23.6% of Fibonacci retracement as a resistance.
Sell at 1.27833, Stop loss at 1.28657, Take profit at 1.26808