Canada’s employment data in focus

The USD edged higher yesterday interrupting the downward motion of the previous two days as worries for a possible recession in the US economy were revived by weak data and tended to push safe haven inflows towards the greenback. It should be noted that market focus seems to be steadily shifting towards the release of the US employment report for March, especially after the disappointing releases of February’s JOLTS Job openings on Tuesday and March’s ADP national employment figure which tended to imply that a slack is building up in the US employment market. It was characteristic of the reversal of the market sentiment that US stock markets were sending out mixed signals with Dow Jones edging higher for the day yet Nasdaq and S&P 500 were in the reds. In the US equities markets, we would note Walmart’s expectations to continue, yet ease the pace of its hirings, as inflationary pressures and the overall situation in the US economy seems to be pushing consumers towards the buying of products with a lower profit margin for the retail chain. In our opinion, besides the possibility of the company’s profit being squeezed which is a negative for its share price and may be reflected also in its earnings report for the quarter, the flight of consumers to lower-margin goods may also be a result of the tighter conditions in the US economy, which may have an additional adverse effect also on US economic growth indicators. Gold’s price remained rather stable yesterday yet seems to be under a downward pressure during today’s Asian session, as the USD advanced higher. North of the US border we note that the Loonie took a beating yesterday, as February’s trade surplus narrowed beyond expectations and actually was slashed to a quarter of January’s figure, highlighting that the Canadian economy benefited less from its international trading activities. We also note that on a more fundamental level, WTI prices remained elevated, yet worries for a possible recession in the US economy may place downward pressure on oil prices which in turn may have an adverse effect also on the CAD given that Canada is a major oil-producing country. Today we highlight the release of Canada’s employment data for March and forecasts are expected to show that the unemployment rate ticked up and the employment change figure dropped. Should that be the case data would be aligning towards pointing towards an easing in the tightness of the Canadian employment market, which could weaken the CAD further, as it may solidify further BoC’s decision to remain on hold, if not intensify some dovish voices in BoC’s environment.    

EUR/USD edged lower yesterday nearing the 1.0855 (S1) support line. We tend to maintain a bias for a sideways motion currently as the upward movement of the pair of the prior two days was interrupted and given that the RSI indicator for the time being seems to remain close to the reading of 50 also implying a rather indecisive market about the direction of the pair’s next leg. Should the bears take over, we may see EUR/USD breaking the 1.0855 (S1) support line and aim for the 1.0695 (S2) support level. Should the bulls take over, we may see the pair breaking the 1.1000 (R1) resistance line and aim for the 1.1140 (R2) resistance level.

USD/CAD was on the rise yesterday breaking clearly the 1.3465 (S1) resistance line, now turned to support again as the price action moved above it. We note the bullish tendencies of the pair as an upward trendline seems to have started to form in the past two days, yet we also note that despite the RSI indicator being on the rise, it still is at the reading of 50, implying that the bearish sentiment has faded away yet the bulls have still to take over. Should the pair find fresh buying orders along its path we may see it aiming if not breaking the 1.3560 (R1) resistance line. Should a selling interest be expressed by the market, we may see USD/CAD breaking the 1.3465 (S1) support line and aim for the 1.3335 (S2) support level.

Other highlights for the day:

Today in the European session, we note the release of Germany’s industrial output growth rate for February, UK’s Halifax House Prices for March, Sweden’s GDP rate for February, as well as UK’s and Eurozone’s construction PMI figure for the past month. In the American session, we note the release of the US weekly initial jobless claims figure, while on the monetary front we note the planned speech of St. Louis Fed President Bullard. During tomorrow’s Asian session, we note the release of Japan’s All Household spending for February.     

EUR/USD H4 Chart

Support: 1.0855 (S1), 1.0695 (S2), 1.0530 (S3)

Resistance: 1.1000 (R1), 1.1140 (R2), 1.1270 (R3)

USD/CAD H4 Chart

Support: 1.3465 (S1), 1.3335 (S2), 1.3230 (S3)

Resistance: 1.3560 (R1), 1.3655 (R2), 1.3790 (R3)

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