USD/CAD: A push under 1.3720/35 targets a drop back to 1.3675 – Scotiabank

The Canadian Dollar (CAD) is idling in a tight range, Scotiabank’s chief FX strategist Shaun Osborne notes.

Slips into a sideways range trade around 1.3725

“Canadian jobs data this morning are expected to show a rebound in hiring. The consensus expectation is for a 25k gain following the June drop of 1.4k. The 6m moving average for job gains sits at 32k while the 12m average is +39k so there may be some risk of a slightly higher print. But the unemployment rate is forecast to pick up a tenth to 6.5%, reflecting the expansion in the labour force, while hourly wage growth eases to 4.8% (from 5.6% in June).”

“Policymakers are concerned that rising unemployment will weigh on consumer activity and slow the economy in the coming months and are adjusting interest rates accordingly. That seems to be a conviction view that slightly better than expected data or elevated wage growth today is unlikely to shake. USDCAD is likely to remain well supported in the high 1.36s/low 1.37s for now.”

“Spot has slipped into a sideways range trade around noted retracement support at 1.3725 (61.8% of the 1.3598/1.3946 move up). Short-term momentum remains USD-bearish, keeping risks tilted to the downside but markets are showing little intent of pressuring the low 1.37s more intently today. Resistance is 1.3775/90. A concerted push under 1.3720/35 targets a drop back to 1.3675.”