Both the U.S. and Canada publishing their latest labor market data means we gotta take a closer look at USD/CAD!
Will today’s headlines maintain the pair’s short-term downtrend?
Before moving on, ICYMI, yesterday’s watchlist checked out GBP/CAD’s short-term range ahead of BOE’s policy decision. 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:
Bank of England held the official bank rate at 5.25% with a vote of 3 to hike and 6 to hold; signaled once again that it’s much too early to think about rate cuts
Weekly U.S. Initial jobless claims: 217K (210K forecast; 212K previous); continuing claims rose to 1.79M vs. 1.727M previous
U.S. Unit Labor Costs fell by -0.8% q/q in October vs. +3.2% q/q rise in Q2; productivity rose by 4.7% y/y vs. 3.6% y/y prior
U.S. Factory Orders for September spiked by 2.8% m/m (0.8% m/m forecast; 1.0% m/m previous)
Challenger U.S. Job cuts for October 2023: 36.84K vs. 47.45K in September
SNB announced the December 1 start of its central bank digital currency (CBDC) pilot project involving four other commercial Swiss banks
China’s Caixin services PMI picked up from 50.2 to 50.4 in October; “Subdued activity levels coincided with a further slowdown in new order growth”
Price Action News
Overlay of NZD vs. Major Currencies Chart by TradingView
Like in most U.S. NFP Fridays, forex price action was limited to tight ranges ahead of the U.S. session. It didn’t help that the Japanese market was out on a bank holiday.
The New Zealand dollar did see more volatility compared to its peers, starting with a sharp drop around the time China printed a mild improvement (but still worse than expected) Caixin services PMI.
NZD quickly covered from its bearish spike, however, and cautious optimism soon brought the comdoll in the green. It’s currently posting the fewest gains against EUR and AUD while gaining the most against CAD, USD, and JPY.
Upcoming Potential Catalysts on the Economic Calendar:
U.K.’s final services PMI at 9:30 am GMT
Eurozone’s unemployment rate at 10:00 am GMT
Canada’s labor market data at 12:30 pm GMT
U.S. NFP reports at 12:30 pm GMT
U.S. ISM services PMI at 2:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
USD/CAD 15-min Forex Chart by TradingView
In a few hours, Uncle Sam will publish its closely watched October non-farm payrolls (NFP) numbers. But Canada is ALSO dropping its labor market data.
This is why we’re keeping close tabs on USD/CAD, which is forming lower highs and lower lows in the 15-minute time frame.
Will today’s headlines keep the pair in its descending channel pattern? Or will we see an upside breakout today?
The U.S. NFP Report Event Guide pointed out that the markets are expecting more of the “slowing but robust” labor market trends but that the report has also surprised to the upside pretty often in the last few months.
Meanwhile, traders see weaker labor data in October compared to September.
Stronger-than-expected U.S. labor market data could bump USD/CAD above its channel pattern and maybe push it to the Pivot Point (1.3780) line if not the R1 (1.3820) previous inflection point.
But if the U.S. reports miss, Canada’s labor data release surprises to the upside, or if traders focus on extending this week’s anti-USD themes, then USD/CAD could take another trip down to its intraweek lows. It may even revisit the 1.3700 psychological level depending on the post-report momentum!
Remember that the U.S. NFP report tends to produce wild swings among the major USD pairs during the release. Consider putting positions on after the calendar events to minimize your risks of getting stopped out because of wild price swings!
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