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Forex - USD/CAD weekly outlook: August 5 - 9

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Shutterstock photo - The U.S. dollar ended Friday's session close to a three-week high against its Canadian counterpart on Friday, after a report showed U.S. employers added fewer jobs in July than forecast, casting doubts over the strength of the U.S. economy and the need for stimulus.

USD/CAD hit session highs of 1.0403, the strongest level since July 18, before settling at 1.0393 at the close of trade, 0.45% higher for the day and up 1.1% for the week.

The pair is likely to find support at 1.0337, Friday's low and resistance at 1.0438, the high from July 18.

The Department of Labor said the U.S. economy added 162,000 jobs in July, less than the 184,000 increase forecast by economists. June's figure was revised down to 188,000 from a previously reported 195,000.

The unemployment rate ticked down to 7.4% from 7.6% in June, due in part to more people leaving the labor force.

The data came amid growing uncertainty over the future of the U.S. central bank's stimulus program, after the Fed said on Wednesday that it would keep buying USD85 billion a month in mortgage and Treasury securities and gave no hint of plans to taper its bond-buying program.

Despite Friday's disappointing jobs report, demand for the greenback remained supported following the release of upbeat U.S. economic data released earlier in the week.

The U.S. Department of Labor said on Thursday that the number of individuals filing for initial jobless benefits fell by 19,000 to a seasonally adjusted 326,000 last week, the lowest level since January 2008.

Meanwhile, the Institute for Supply Management said its index of purchasing managers rose to 55.4 in July, the highest level since April 2011 and up from a reading of 50.9 in June.

The robust data came after the Commerce Department said on Wednesday that gross domestic product grew at a seasonally adjusted annual rate of 1.7% in the three months to June, beating expectations for growth of 1%.

That followed a report from payroll processing firm ADP, which said non-farm private employment rose by a seasonally adjusted 200,000 in July, above expectations for an increase of 180,000.

Elsewhere, in Canada, official data showed on Wednesday that the country's economy grew at a seasonally adjusted rate of 0.2% in May, in line with expectations, after growth of 0.1% the previous month.

In the week ahead, the U.S. is to publish data on service sector activity as well as a report on the trade balance to further gauge the strength of the U.S. economy.

Investors have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.

Ahead of the coming week, has compiled a list of these and other significant events likely to affect the markets.

Monday, August 5

Markets in Canada are to remain closed for a national holiday.

In the U.S., the Institute of Supply Management is to produce a report on service sector activity, a leading economic indicator.

Tuesday, August 6

Canada is to produce government data on the trade balance, the difference in value between imports and exports.

The U.S. is also to release a report on the trade balance.

Wednesday, August 7

Canada is to publish government data on building permits, a leading indicator of future construction activity, as well as the Ivey PMI.

The U.S. is to produce weekly data on crude oil supplies.

Thursday, August 8

The U.S. is to release the weekly government report on initial jobless claims, a leading economic indicator.

Friday, August 9

Canada is to round up the week with data on the change in the number of people employed and the unemployment rate, a leading economic indicator. - offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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