Source: PaxForex Premium Analytics Portal, Fundamental Insight
The US NFP Report for August is predicted to show 300K job additions and an unemployment rate of 3.5%. Forex traders can compare this to the US NFP Report for July, which showed 528K job additions and an unemployment rate of 3.5%. Private Payrolls for August are predicted to show 300K job additions and Manufacturing Payrolls 20K job additions. Forex traders can compare this to Private Payrolls for July, which showed 471K job additions, and Manufacturing Payrolls, which showed 30K job additions. The Average Work Week for August is predicted at 34.6 hours. Forex traders can compare this to the Average Work Week for July, reported at 34.6 hours. Average Hourly Earnings for August are predicted to increase 0.4% monthly and 5.3% annualized. Forex traders can compare this to Average Hourly Earnings for July, which rose 0.5% monthly and 5.2% annualized.
US Factory Orders for July are predicted to increase 0.2% monthly. Forex traders can compare this to US Factory Orders for June, which rose 2.0% monthly.
With the US Dollar at two-decade highs, it is hurting exporters, widening deficits, and fueling inflation. The US Federal Reserve is now prone to more policy mistakes, repeating previous central bank patterns after dismissing inflation as transitory and Covid-19 related, displaying their lack of understanding of what caused inflation to spike. Inflation has manifested itself, and following a recession, a long period of stagflation may follow. The US central bank is set to hike rates to 4.00%+, maintain them until 2024, and accelerate its long-overdue quantitative tightening. It will also ignore issues in M2, and despite current US Dollar strength, policy mistakes and economic issues will result in US Dollar weakness moving forward.
The forecast for the USD/CAD turned bearish after this currency pair recorded a lower high, forming an imperfect double top formation, from where more downside is likely. Confirming the lack of bullishness are the flat Kijun-sen and Tenkan-sen. The Ichimoku Kinko Hyo Cloud shows a bullish crossover, but traders should monitor it for a potential reversal amid increased volatility. Another significant bearish development is the negative divergence in extreme overbought territory in the CCI, confirming the lower high in price action. A breakdown below 100 could trigger a massive sell-off and retrace the most recent advance in this currency pair. Can bears regain control of price action in the USD/CAD and force it into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the USD/CAD remain inside the or breakdown below the 1.3060 to 1.3210 zone, PaxForex recommends the following trade set-up:
Should price action for the USD/CAD breakout above 1.3210, PaxForex recommends the following trade set-up:
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