Canadian dollar eyes Ivey PMI, job report

The Canadian dollar has posted considerable losses today. USD/CAD is trading at 1.3688, up 0.49%.

Canada releases Ivey PMI for September later today, with the markets anticipating another solid release. The PMI skyrocketed in August to 60.9, up from 49.6 in July, well into expansion territory. The September PMI is expected to remain unchanged.

Will Canada’s employment change bounce back?

The week wraps up with job reports from both Canada and the US on Friday, and that could mean some volatility from the Canadian dollar in Friday’s North American session. Canada’s economy shed 39.7 thousand jobs in a dreadful August report, but is expected to bounce back in September with a gain of 20,000 new jobs. The unemployment rate is projected to remain steady at 5.4%.

In the US, we’ll get a look at non-farm payrolls for September. This release used to garner massive attention, but inflation and rate announcements have stolen much of the NFP’s thunder. Still, the reading is an important gauge of the health of the US economy and can provide insights into the Federal Reserve’s future rate policy.

On Wednesday, the ADP employment report showed a slight improvement at 208,000, up from 185,000 (200,000 est.) ADP is utilizing a new methodology to calculate its readings, which hopefully will improve its reliability, as the release receives a lot of attention but has not proven an accurate predictor of the official NFP release. The markets are bracing for a decline in non-farm payrolls to 250,000 in September, down from 315,000 in August. A reading that is well off the estimate could trigger volatility from the US dollar –  a strong reading will raise expectations that the Fed will stay very aggressive, while a soft release could mean the Fed has to pivot earlier than it expected.

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USD/CAD Technical

• USD is testing resistance at 1.3744. The next resistance line is 1.3927
• There is support at 1.3647 and 1.3542

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