Previewing next week’s key macroeconomic data releases from the US, TD Securities analysts said they expect Nonfarm Payrolls to surge again in July, “with the pace up a bit from the +850k in June.”

Key quotes

“Some acceleration in the private sector is suggested by the Homebase data, while government payrolls probably benefited from favorable seasonal adjustments. We forecast another 0.3% m/m rise in average hourly earnings. The 12-month change is likely to rise again to 3.8% from 3.6% in June.”

“Mixed but slightly positive signals from regional data suggest improvement relative to June for the ISM surveys. At around 60, the June readings were still consistent with strong growth, although both came off of recent highs (the 64.0 reading for services in May was an all-time high). The boosts to growth from “reopening” and fiscal stimulus have probably peaked.”

  • USD/CAD gained traction in the American trading hours on Friday.
  • Canadian economy contracted by 0.3% in May as expected.
  • US annual Core PCE inflation edged higher to 3.5% in June. 

The USD/CAD pair dropped to a daily low of 1.2420 in the early American session on Friday but managed to stage a decisive rebound. As of writing, the pair was up 0.25% on the day at 1.2475 and was on track to snap a two-day losing streak. Despite the recent recovery, the pair looks to end the week in the negative territory.

DXY reclaims 92.00 ahead of the weekend

The renewed USD strength helped USD/CAD gain traction in the second half of the day. The data from the US showed on Friday that the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, edged higher to 3.5% on a yearly basis in June. This reading, however, came in lower than the market expectation of 3.7% and failed to trigger a significant market reaction.

Nevertheless, St. Louis Fed President James Bullard’s hawkish remarks and the poor performance of Wall Street’s main indexes provided a boost to the USD.

Bullard argued that the Fed should start tapering asset purchases this fall and noted that he expects to see the initial rate hike in the last quarter of 2022. The US Dollar Index, which dropped to a monthly low of 91.78, is currently rising 0.26% on a daily basis at 92.12.

On the other hand, Statistics Canada announced that the Real Gross Domestic Product contracted by 0.3% in May, as expected.

In the meantime, the barrel of West Texas Intermediate (WTI) is rising 0.75% near $74 on Friday, limiting USD/CAD’s upside ahead of the weekend.

Technical levels to watch for