The Canadian Dollar (CAD) shows resilience by holding steady against the US Dollar (USD), influenced by a stable US\/Canada spread and weak movements in commodities and risk appetite. The estimated equilibrium rate for USD\/CAD is 1.3625, and the CAD might need positive data, such as a surprise in employment growth, to close this valuation gap.<\/p>\n
Scotia projects Canadian employment for July to gain 20,000 jobs. This optimism may affect the CAD positively, especially following an 83,000 job increase in June. The short-term USD\/CAD downtrend holds negative momentum, and breaking through support levels could further improve CAD’s position, although resistance is noted at 1.3750\/75.<\/p>\n
Markets face possible volatility with the Canadian Labour Force Survey, predicting job creation moderation and an unemployment rate rise. The Bank of England also adjusts its rates, reflecting concerns over inflation persistence, affecting wider market trends. As the USD recovers modestly, specific currency pairs like EUR\/USD and GBP\/USD adjust, reflecting economic and policy changes. Gold prices are similarly challenged by market conditions and USD strength. <\/p>\n
While navigating these market changes, thorough research and awareness of potential financial risks are advised for trading.<\/p>\n
Given today’s date, we must first react to the Canadian Labour Force Survey for July which was just released this morning. The report showed a surprisingly strong gain of 45,000 jobs, more than double the 20,000 that was projected, while the unemployment rate held steady at 6.2%. This positive surprise has already pushed the USD\/CAD pair down sharply from the 1.37 level it was hovering at yesterday.<\/p>\n
For derivative traders, this means implied volatility is likely to decrease now that the event risk from the jobs report has passed. We should consider selling USD\/CAD call options with strike prices near the 1.3750 resistance level, capitalizing on both the falling volatility and the newly strengthened Canadian dollar. This strategy benefits if the pair trades sideways or continues its downward trend in the coming weeks.<\/p>\n
This Canadian strength is happening as US jobs data showed more moderate results, with non-farm payrolls last week coming in around 185,000, suggesting the US economic momentum may be cooling slightly. Furthermore, we’ve seen WTI crude oil prices show renewed strength, recently climbing back above $85 per barrel, which provides an additional tailwind for the commodity-linked CAD. These factors support a continued move lower in the USD\/CAD pair.<\/p>\n
Looking back to a similar period in late 2024, we saw that a series of strong Canadian data surprises, combined with stable oil prices, created a sustained downtrend in USD\/CAD for several weeks. History suggests that when these fundamental drivers align, the path of least resistance for the pair is lower. Therefore, we should be cautious about fighting this emerging trend.<\/p>\n
With the valuation gap now closing towards the 1.3625 equilibrium estimate, any rallies in USD\/CAD should be viewed as potential selling opportunities. The next major catalyst will be the upcoming inflation data, which will influence the Bank of Canada’s thinking for its September interest rate decision. A hawkish shift from the central bank could push the pair through key support levels.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Canadian Dollar holds steady versus USD, with employment data and market sentiment likely to influence direction.<\/p>\n","protected":false},"author":62,"featured_media":16961,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28631","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28631","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=28631"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28631\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16961"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28631"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28631"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28631"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}