US and Canadian Data Helping USD/CAD Knock on New Highs

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US and Canadian Data Helping USD/CAD Knock on New Highs

The USD/CAD is moving higher. This rally is coinciding with US and Canadian data so let’s first take a look at the data, then the technical aspect of the pair.

US:
PPI m/m (Feb) -0.5%
Forecast: 0.2%
Previous: -0.8%
us ppi
(click to enlarge; source: forexfactory.com)
Core PPI m/m (Feb) -0.5%
Forecast: 0.1%
Previous: -0.1%
Prelim. UM Consumer Sentiment (Mar.) 91.2
Forecast: 95.6
Previous: 95.4 (revised from 93.6)
umich sentiment
(click to enlarge; source: forexfactory.com)

In the US inflation at factory gates remain negative. There’s no real deflationary concerns at the moment, but the lack of inflation could become an impediment to the FOMC’s rate hike plan. Meanwhile, we saw a dip in consumer sentiment based on the University of Michigan survey. This is still at high levels, but combined with the poor retail sales data we saw earlier in the week, there are some headwinds against USD-gains that are based on the FOMC raising rates around mid-year.

Canada:
Employment Change (Feb.) -1.0K
Forecast: -3.5K
Previous: 35.4K
can employment change feb 2015
(click to enlarge; source: forexfactory.com)
Unemployment Rate (Feb.): 6.8%
Forecast: 6.7%
Previous: 6.6%
CAN unemployment
(click to enlarge; source: forexfactory.com)

Canadian jobs data was expected to decline. The unemployment rate was expected to rise. We didn’t see as much of a drop in the number of jobs, but the unemployment rate rose faster than expected. The Canadian jobs market has been inconsistent throughout 2014. This is nothing new, but the climb in unemployment rate since it hit 6.5% at the end of 2014, is a concern.

The market decided that there was more to worry about in terms of the Canadian job market. The US jobs market seem to be recovering well, except for wage growth. A strong recovery in employment can help lift demand, inflation, and the rest of the economy so even though both US and Canadian data were disappointing, the CAN jobs data was more concerning.

USD/CAD shook a little then pushed high, breaking the 1.28 resistance. There are still sellers here, but as long as price holds above 1.27, there is upside risk and the 1.28 will be vulnerable. Above 1.28, the next resistance is in the 1.30-1.3060 area, the 2008/2009-highs.

USD/CAD 4H Chart 3/13
usdcad 4h chart 3/13
(click to enlarge)

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.