Greenback Turns Bullish After Impressive Job Additions in July 2017

US DollarIn the last one month, Canadian Dollar is regarded as one of the best-performing currencies of the world. The main reason behind this is crude oil rally, strong GDP growth and a rate hike coupled with the hawkish stance of the Bank of Canada.

On the other hand, the US Dollar is declining because of weak wage growth and soft inflation data. The currency pair USD/CAD after dropping to a low 1.2410 recovered to close approximately 1.2650 past week. We believe the uptrend is likely to continue in the future and the reason for same is discussed below.

Last Friday, US Bureau of Labor Statistics said there was an increase in Non-Farm employment by 209,000 in July.

The figures mentioned above were lower than last month’s job addition of 231,000 but more than the estimates of analysts by 182,000.

There is an increase in employment in professional and business services, food and healthcare. There is a decline of 01% M-O-M to 4.3% in the unemployment rate, and it corresponds with the estimates of the analysts.

CityNews Toronto

There is a marginal improvement in the trade deficit of US in June due to an increase in exports. As per the Bureau of Economic Analysis and US Census Bureau, there is a drop of $2.7 billion to $43.6 billion in the goods and services deficit in June from the figure of $46.4 billion in May. The exports rose by $2.4 billion to $194.4 billion, but there is a decline in imports which fell $0.4 billion to $238 billion.

As far as Canada is concerned, only 10,900 jobs were added in July which declined from 45,300 in the last month and lower than the expectations of the analysts of an addition 13,100 jobs.

Similarly, the trade deficit of Canada widened to $3.6 billion in June from $1.4 billion in past month. The analysts expected the gap to narrow down to $1.3 billion. There is a decline in exports of 4.3% to $46.5 billion in June. Lower drought for energy and unwrought gold also led to the fall. The increase in gold bullion demand helps import to grow by 0.3% to $50.1 billion.

As per one report from Thomson Reuters, the crude oil exports hit the highest in July because of shipment increase from the African countries especially Libya. The OPEC output in July rose to 33 million barrels, up 90,000 barrels as compared to last month. The West Texas Intermediate crude declined below the psychological barrier of $50 to close on Friday at $49.41. In addition to this, one report from Barclays also forecasts a downward correction during this quarter. The Canadian dollar will be weakened because of a bearish outlook for crude oil. Hence, in the coming days, the overall economic data favours a rally in the currency pair USD/CAD.

As it is clear from the image below, the stock is moving along the ascending line. The currency pair has also crossed above 50-period moving average. In addition to this, the bullishness also contributes to the rising on balance volume indicator.

USDCAD Pair August 7th 2017

USDCAD Pair August 7th, 2017

We prefer a LONG position in the currency pair USD/CAD at the moment. We are looking forward to entering around 1.2630 to CUT PROFITS at 1.2940. A stop order needs to be placed below 1.2530.

It is recommended to purchase a CALL Option and select the expiry period August 16. The trade opens when the exchange rate of the currency pair is approximately 1.2630.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.

No comments

Write a comment
No Comments Yet! You can be first to comment this post!

Write a Comment