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USDCAD Steady Ahead of Dual Jobs Reports

Published December 2, 2016
  • USDCAD is steady near 1.3300 as markets await jobs reports from the US and Canada this morning
  • Oil has given up some of its post OPEC rally with WTI trading 1% lower at $50.50
  • One certainly can't entirely discount the 10% rally since their production cut was announced, however, it is interesting to note that spot prices have not reached their September peak of $51.93 for WTI which came a few days after OPEC's meeting in Algiers when they first announced their intentions
  • We are also carefully watching the forward curve to see if the spread between spot and far dated prices continues to narrow
  • This would indicate that a more fundamental tightening of the supply/demand dynamic is underway as inventories stop building and barrels need to come out of storage to fill near term demand, resulting in higher spot prices and lower forward prices 
  • Today's jobs numbers could prove to be the catalyst for USDCAD to test the mettle of this recent uptrend for the greenback
  • The market is looking for +175k from the US and -20k from Canada
  • A positive number from Canada, with the caveat that the jobs mix is skewed towards full-time positions rather than part-time, should be enough for USDCAD to test the 1.3265 area
  • However, data from the US has been stellar of late and we suspect this will be on display in today's jobs numbers
  • US Consumer Confidence is at its highest since 2007, manufacturing surveys are all expanding, and wages rose faster than economists’ expectations last month
  • US yields continue to move higher in reflection of the improving economic backdrop and the expectation that Trump is fully committed to reflating the economy with infrastructure spending, tax cuts, and trade deals
  • A close for USDCAD below 1.3265/75 would indicate that the market should continue to move lower
  • Conversely, a move back above 1.3430 should get USD bulls excited once again
  • The Loonie tends to weaken during December, with the last 3 years averaging just over 2% in losses against the US dollar, so as always, prepare the best you can!

Charts: (1) USDCAD testing its recent range (2) USDCAD seasonal performance for December re-based to zero (3) Economic Calendar