The main event of the day will be Canadian jobs, with economists at TD Securities agreeing on a solid 175K rebound in June. The loonie could be in for better days ahead, with the Bank of Canada meeting next week and the USD/CAD showing early symptoms of a negative divergence.
“We expect the labor market to rebound in June, with 175K new jobs added, recouping a significant portion of the 275K jobs lost during COVID-19 lockdowns in April and May.” With 175K new jobs added, overall employment will be 400K lower than it was before the recession, and the unemployment rate will test the March lows of 7.5 percent.”
“While we are in line with the market on jobs, we believe that a better unemployment reading will give the data a more positive spin overall.” Yesterday’s rejection of 1.26 in USD/CAD had the makings of an extensive upward advance, but it’s still too early to tell. The daily RSI, on the other hand, is showing symptoms of bearish divergence, which might leave the pair vulnerable if today’s data is stronger than expected. 1.2518 should give initial support, but we believe the 1.2480/90 zone and 1.2430/45 zones, ahead of the 100-DMA (1.2378), might be major near-term hurdles.”/n
