USD/CAD forecast: signal after the US NFP, Canada GDP data

September 01, 2023 08:27 AM PDT | By Invezz
 USD/CAD forecast: signal after the US NFP, Canada GDP data
Image source: Invezz

The USD/CAD exchange rate drifted upwards on Friday as investors reacted to the mixed economic numbers from the United States and Canada. The pair jumped to a high of 1.3592, the highest level since Tuesday. This price was much higher than the intraweek low of 1.3495.

US and Canada economic data

The USD/CAD pair was in the spotlight on Friday as investors reflected on the latest data from Canada and the US. In Canada, numbers revealed that the economy expanded slower than expected.

The Canadian GDP came in at 0.0% in Q2, lower than the expected estimate of 0.3%. This increase translated to a YoY growth of 1.12%, which was less than the median estimate of 0.3%. The economy also contracted by 0.2% in June.

These numbers mean that the situation in Canada is not good considering that inflation remains much higher than the BoC’s target of 2.0%. It implies that the economy has moved into a stagflation phase.

Watch here: https://www.youtube.com/embed/ZMrm-Y8f7B4?feature=oembed

The USD/CAD exchange rate also reacted to the latest US non-farm payrolls (NFP) data, which I previewed here. The data revealed that the American economy created 187k jobs in August after adding 157k in the previous month. This increase was better than the median estimate of 170k.

These numbers mean that the labor market is still strong. On a positive note for the Fed, the country’s unemployment rate rose to 3.8% while the average hourly earnings dropped from 4.4% to 4.3%. 

Therefore, there is a likelihood that the Federal Reserve will have the justification to leave rates unchanged in September. In theory, falling hourly earnings should help to lower the American inflation.

Data published on Thursday showed that the personal consumer expenditure (PCE) remained steady in August.

USD/CAD technical analysis

USD/CAD

The USD/CAD exchange rate has been in a strong upward trend, helped by the stronger dollar. Along the way, the pair formed an ascending channel, which is shown in black. It made a bearish breakout below this channel in August and is now attempting to retest it.

The Relative Strength Index (RSI) has risen above the neutral point. Therefore, I suspect that the pair will likely continue rising as buyers target the year-to-date high of 1.3640.

The post USD/CAD forecast: signal after the US NFP, Canada GDP data appeared first on Invezz.


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.


Sponsored Articles


Investing Ideas

Previous Next