Dollar bears are getting back in the game lately!
Does this mean another leg lower for USD/CAD when the NFP is released?
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/USD’s pullback to a broken range bottom. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. Challenger job cuts up from 175.9% year-over-year in April to 286.7% in May, as employers cut 80,089 positions while hiring activity slumped
ADP non-farm employment change slowed from 291K to 278K in May vs. 173K estimate, with annual pay up 6.5% year-over-year
U.S. weekly initial jobless claims at 232K in the week ending May 27 vs. 236K forecast and 230K previous
ISM manufacturing PMI fell from 47.1 to 46.9 in May to reflect sharper pace of industry contraction, jobs component up from 50.2 to 51.4 to signal stronger growth while prices index fell 53.2 to 44.2
Fed official Harker pointed out that consumers aren’t spending as much as they used to, so it might be time to pause in June
EIA crude oil inventories post surprise 4.5 million barrel build instead of the estimated 1.2 million barrel draw, suggesting slower demand
New Zealand overseas trade index fell 1.5% quarter-over-quarter in Q1 as expected, following earlier downgraded 1.5% gain
BOJ Governor Ueda reiterated that inflation could still slow down, so easy monetary policy will be maintained, higher inflation trend is likely but it will take time
Price Action News
Overlay of USD Pairs 15-min
Dollar weakness came back with a vengeance during the previous New York trading session, as leading U.S. jobs indicators turned out mixed while some Fed officials reiterated the need to “skip” hiking this month.
The Greenback chalked up its sharpest losses against the Aussie and the Kiwi, with the slump carrying on until the early Asian session, while other dollar pairs moved sideways.
French industrial production at 6:45 am GMT
U.S. May employment situation (NFP) report at 12:30 pm GMT
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USD/CAD 15-min Forex Chart by TV
Is that a bearish flag I’m seeing on the short-term chart of USD/CAD?
Another round of dollar weakness could spark a selloff that’s the same height as the flag’s mast, possibly taking the pair down by at least a hundred pips.
This might drag price to S2 (1.3340) which is just slightly below the 1.3350 minor psychological support.
Dollar traders are likely to hold their breaths until the release of the May 2023 NFP report, as downbeat results could support the possibility of a Fed pause later this month.
If the results come in line with estimates or slightly higher, though, USD/CAD could pull up to nearby resistance levels at the pivot point (1.3490) or the falling trend line near R1 (1.3540).
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