All eyes will be on today’s NFP report for December out of the US. November surprised to the upside, keeping the rally alive and easing concerns about the health of the economy. Since then, economic reports out of the US have been weaker than expected and initial jobless claims have increased. The ADP report showed a strong increase in private-sector jobs, how will the USDCAD trade following the release of this critical report? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
The November employment report out of Canada showed disappointing and unexpected job losses. Economists expect a partial rebound for December. The USDCAD continued its sell-off, on the back of a weakening US Dollar. Price action recovered from its lows, but what impact will the two employment reports out of the US and Canada have on this currency pair? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
Here are the key factors to keep in mind today for US Dollar trades:
- US NFP Report: The US NFP Report for December is predicted to show 160K job additions and an unemployment rate of 3.5%. Forex traders can compare this to the US NFP Report for November, which showed 266K job additions and an unemployment rate of 3.5%. Private Payrolls for December are predicted to show 152K job additions and Manufacturing Payrolls 5K job additions. Forex traders can compare this to Private Payrolls for November, which showed 254K job additions and to Manufacturing Payrolls, which showed 54K job additions. The Average Work Week for December is predicted at 34.4 hours. Forex traders can compare this to the Average Work Week for November, which was reported at 34.4 hours. Average Hourly Earnings for December are predicted to increase by 0.3% monthly and by 3.1% annualized. Forex traders can compare this to Average Hourly Earnings for November were increased by 0.2% monthly and by 3.1% annualized. The Labor Force Participation Rate for December is predicted at 63.2%. Forex traders can compare this to the Labor Force Participation Rate for November, which was reported at 63.2%.
- US Wholesale Inventories and Trade Sales: US Final Wholesale Inventories for November are predicted to increase by 0.1% monthly. Forex traders can compare this to previous US Wholesale Inventories for November, which were reported flat at 0.0% monthly. US Wholesale Trade Sales for November are predicted to increase by 0.2% monthly. Forex traders can compare this to US Wholesale Trade Sales for October, which decreased by 0.7% monthly.
Here is the key factor to keep in mind today for Canadian Dollar trades:
- Canadian Employment Report: The Canadian Employment Report for December is predicted to show the addition of 25.0K jobs and an Unemployment Rate of 5.8%. Forex traders can compare this to the Canadian Employment Report for November, which showed the loss of 71.2K jobs and an Unemployment Rate of 5.9%. Hourly Earnings for Permanent Employees for December are predicted to increase by 4.2% annualized. Forex traders can compare this to Hourly Earnings for Permanent Employees for November, which increased by 4.5% annualized. 10.0K Full-Time Positions and 21.4K Part-Time Positions are expected to have been created in December. Forex traders can compare this to the loss of 32.8K Full-Time Positions and 38.4K Part-Time Positions, which were reported in November. The Labor Force Participation Rate for December is expected at 65.6%. Forex traders can compare this to the Labor Force Participation Rate for November, which was reported at 65.6%.
Should price action for the USDCAD remain inside the or breakdown below the 1.3040 to 1.3100 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.3060
- Take Profit Zone: 1.2780 – 1.2855
- Stop Loss Level: 1.3120
Should price action for the USDCAD breakout above 1.3100 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.3120
- Take Profit Zone: 1.3270 – 1.3320
- Stop Loss Level: 1.3060
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