Article by ForexTime
The Canadian dollar held its ground as crude oil prices continued to recover, giving some support to the Loonie. The rapid decline in oil prices followed by the recent snap back has eroded confidence in Canadian assets including the TSX and the currency.
Canada average weekly earnings rose 0.3% month over month in October after a revised flat reading in September. Earnings slowed to a 2.8% year over year pace in October from the 3.1% year over year clip in September, keeping earnings on a tame trajectory that backs the Bank of Canada’s view that the compensation cost backdrop remains subdued and consistent with persistent slack in the economy. Declining earnings have eroded confidence in Canadian equity bourses.
Employment rose 14.6k in October after the 14.3k rise in September and 14.5k gain in August, leaving job growth in every month going back to April. That contrasts with the labor force survey, where employment shot 43.1k higher in October after the 74.1k jump in September but 11.0k drop in August. The most recent reading for the labor force survey was a 10.7k drop in November.
Looking forward, the monthly GDP data will highlight in the holiday shortened week, with the market closed Thursday for Christmas Day and Friday for Boxing Day. Estimates are for GDP, which is scheduled to be released on Tuesday to rise 0.1% in October after the 0.4% bounce in September. That would leave GDP on track for a 2.3% clip in Q4, slightly undershooting the Bank of Canada’s 2.5% estimate and consistent with an extended period of steady policy.
The USD/CAD bounced off of support following the earnings release near 1.5760, with resistance seen near the recent highs at 1.1665. Momentum is positive as the MACD (moving average convergence divergence) index prints in positive territory with an upward sloping trajectory. The RSI moved higher with price action reflecting accelerating positive momentum, while printing a reading of 65, which is on the upper end of the neutral range.
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