The Canadian dollar managed to strengthen slightly yesterday, as the currency strengthens from oversold conditions. The currency continues to look oversold in the daily charts, particularly against the US dollar. Today is a critical day for the Canadian dollar, given that both employment figures and trade balance numbers are set to be released. The consensus forecast is for unemployment to remain around 6.2%, while the trade balance is also expected to stay negative (-3b). As Canadian growth continues to decelerate in rate-of-change terms, economic data should be weaker going forward. If today's numbers beat expectations, expect the Canadian dollar to be much stronger as the currency bounces back from short-term oversold conditions.
The USD/CAD exchange rate is currently above 1.2820. The euro is flat against the Canadian dollar today, after weakening yesterday. EUR/CAD is currently below 1.4940. Lastly, the pound is down sharply against the Canadian dollar, with GBP/CAD trading below 1.6730.
This week has a few important events on the calendar. Monthly GDP figures for August widely missed expectations (-0.1% vs. 0.1% expected). Markit manufacturing PMIs were lower versus the prior figures (54.3 vs. 55 prior). Later today, we’ll get trade balance and unemployment numbers. Last week, the BoC maintained interest rates and expressed its “caution” regarding future rate hikes.