The Canadian dollar is showing limited movement on Wednesday. In the North American session, USD/CAD is trading at 1.2391, down 0.08% on the day.
Canada’s GDP expected to decline
Canada releases GDP reports on a monthly, rather than quarterly basis. In March, the economy posted a solid gain of 1.1%, but the market is expecting a downturn in April, with a consensus of -0.8%. Canada’s vaccine rollout has been slower than many other major economies, including the United States. This has hampered the economy, with strict lockdowns being eased only recently. The Bank of Canada was the first of the major central banks to tighten policy, but a decline in GDP would likely preclude the BoC from raising interest rates anytime soon.
In the US, investors will be keeping a close eye on employment data for the remainder of the week. The highlight is the June nonfarm payroll report on Friday. The last two NFP reports have missed the estimates, and the April consensus of 990 thousand was wildly off the mark, with an actual release of only 266 thousand. Ahead of NFP, the US releases the ADP Employment report. Although it is not a reliable indicator of NFP performance, it can cause a buzz in the markets. The consensus stands at 600 thousand, up from 978 thousand.
The US recovery from the Covid downturn has been impressive, but job creation has been less robust than many experts expected. One reason is that many workers are still receiving unemployment benefits and are in no rush to fill the many vacancies that are available. Will the forecast be within expectations? The estimate for the upcoming NFP report stands at 690 thousand, compared to 559 thousand previously. Nonfarm payrolls should be treated as a market-mover which can have a strong impact on the movement of the US dollar.
USD/CAD Technical
- USD/CAD faces resistance at 1.2440, followed by resistance at 1.2580
- On the downside, there is support at 1.2206. Below, there is support at 1.2112
