CAD labour market preview: what to expect of USD/CAD

Along with its US peer, the Canadian labour market will publish its July results later today. Prior surveys see the jobless rate up ticking to 6.9% from 6.8%, while the employment is seen increasing by 10K and reverting June’s 0.7K drop.

Strategists at TD Securities have argued “With TD above consensus on NFP but below consensus on the Canadian release, we look for USDCAD to drift higher on the day. A range of positioning indicators suggest the market is still long CAD so with Canadian data likely to remain weak we continue to look for a steady shift in market positioning. Other drivers also favor a move higher over the near-term. On the topside a key level to watch is 1.3110 with a break opening up a test of 1.3260”.

In the meantime, USD/CAD continues to meander the lower bound of the range above the 1.3000 handle, trading at the same time in the middle of the rising channel off 2016 low (May 3). The initial support aligns at 1.2851, the base of this channel today, while the mid-1.3100s emerges as the initial hurdle on its way up ahead of multi-month tops around 1.3250.