The Canadian dollar has reversed directions on Thursday. Currently, USD/CAD is trading at 1.2577, up 0.13% on the day.
Ontario lockdown snuffs out CAD mini-rally
Since the start of 2021, the Canadian dollar is up about one percent against its US cousin, but there are signs that the currency may have touched bottom.
The province of Ontario, the largest in Canada, is expected to announce an expansion of lockdown restrictions throughout the province. Ontario is expected to announce that the lockdown will be in force for 28 days, in a bid to curb soaring Covid rates. Canada’s number of Covid cases has doubled compared to the beginning of March, but the vaccine rollout has been very slow, with only 2% of the population fully vaccinated.
Another factor is the oil prices hit their most recent peak on March 5th and have been on the decline, even with the spike due to the Suez Canal closing. The unexpectedly strong GDP gave the Canadian dollar a boost on Wednesday, but the negative impact of Covid on the economy and falling oil prices could mean a bumpy road ahead for the Canadian dollar.
Will US Nonfarm Payrolls crush the consensus?
The ADP Employment report for February came in at 517 thousand, shy of the estimate of 552 thousand but a huge rise from the previous read of 117 thousand. We’ll get a look at official employment numbers on Friday, with nonfarm payrolls the highlight (12:30 GMT). The street consensus stands at 652 thousand, which would be a sharp rise from the January read of 379 thousand. However, given the impressive US recovery and an aggressive vaccine rollout, NFP could outperform by a wide margin. Barclays Bank sent a note with a forecast of 900 thousand, and some analysts are predicting a gain of above the one-million mark. If NFP is unexpectedly strong, we can expect some volatility from USD/CAD on Friday.
USD/CAD Technical
- 1.2641 has some breathing room in resistance after USD/CAD dropped considerably on Wednesday. This is followed by resistance at 1.2713
- On the downside, there is support at 1.2486. Below, there is a support level is at 1.2403. This is followed by 1.2365, which is both the 1-month low and the 52-week low
