| Mid-Day Report: Canadian Dollar Tumbles on Unexpected Fall in Employment |  |  |
| Market Overview | Written by ActionForex.com | Jan 11 08 14:17 GMT | | |
| Canadian dollar tumbles in early US session after the release of an unexpectedly weak employment report. Even though unemployment rate remained unchanged at 5.9% in Dec, total employment unexpectedly dropped by -18.7k, first drop in eight months. The report prompted speculations that, following the rate cut last Dec, more is to come. Better than expected trade surplus of 3.7b offered little support to the Loonie. The greenback remains soft against Euro, Swissy and Yen on speculation of 50bsp rate cut from Fed following yesterday's dovish comments from Bernanke. The nominal U.S. trade deficit in goods and services widened much more than expected by 9.3% in Nov, reaching a 14 month high of -$63.1b. Both exports and imports increased but import surged by $5.9b largely due to increase in oil prices. Sterling also remains weak after poor industrial production and manufacturing reports which showed -0.1% mom drop in IP, dragging yoy rate to 0.4%, -0.1% drop in MP, dragging yoy rate down to 0.1%. Though some volatility is seen, the Japanese yen remains generally firm on renewed worries about worse than expected losses in US financial institutions from credit market turmoil. The yen will likely remain supported on weaker open in US stock markets. USD/CAD Daily OutlookDaily Pivots: (S1) 1.0070; (P) 1.0090; (R1) 1.0104; More. USD/CAD's rise from 0.9756 resumes in early US session and reaches as high as 1.02 so far. At this point, intraday bias remains on the upside as long as 1.0063 minor support holds. Retest of 1.0248 resistance is expected to be seen and break will confirm that whole short term rally from 0.9056 has resumed for next upside target of 1.0333. On the downside, below 1.0063 will turn intraday outlook neutral first and argue that USD/CAD's consolidation from 1.0248 is still in progress. In such case, another fall to retest 0.9756 low could be seen before completing such consolidation. In the bigger picture, a medium term decline from 1.1874 has bottomed at 0.9056 and rebounded strongly since then. Rise from then halted at 1.0248. Subsequent correction has completed at 0.9756 after drawing support from 38.2% retracement of 0.9056 to 1.0248 at 0.9793. Current rise from there is tentatively treated as resumption of the rally from 0.9056 and is expected to extend further into resistance zone of 1.0333 and 1.0866. Upside could be limited inside this resistance zone initially as USD/CAD will then be facing a series of resistance including 61.9% projection of 0.9056 to 1.0248 from 0.9756 at 1.0493, 61.8% retracement of 1.1874 to 0.9056 at 1.0798 as well ass 55 weeks EMA (now at 1.0511).
Forex News DigestU.S. November Trade Deficit Widens More Than Forecast on Record Oil Prices Canadian Dollar Falls for a Sixth Day as Economy Unexpectedly Lost Jobs TD Securities Advises Clients to Buy Australia's Dollar Against Canada's Australia, New Zealand Dollar Rise as Yield Premium Widens on U.S. Outlook Merrill report spreads more gloom on dollar and stocks ASIA FX: US Dollar Sinks to Session Lows in Afternoon Trade Financial Sector Worries Boost Yen, Swissie Dollar Falls Against the Yen in Asia Dollar flat in Asian trade in wake of Bernanke speech Gold moves closer to $900 on weak dollar | |
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