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Forex - USD/CAD weekly outlook: January 13 - 17

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Investing.com -

Investing.com - The U.S. dollar rose to more than four year highs against the Canadian dollar on Friday, after unexpectedly weak Canadian jobs data for December added to concerns over the economic outlook and offset a disappointing U.S. nonfarm payrolls report.

USD/CAD rose to 1.0945, the highest level since October 2009, and was last up 0.47% to 1.0891. For the week, the pair advanced 2.18%.

The pair is likely to find support at 1.0836, Friday's low and resistance at 1.1125, the high of August 17, 2009.

Statistics Canada said the economy shed 45,900 jobs last month, while the unemployment rate rose to 7.2% from 6.9% in November, rising above the U.S. unemployment rate for the first time since September 2008.

Analysts had expected the Canadian economy to create 15,000 new jobs last month.

The weak data added to expectations that the Bank of Canada will maintain a dovish stance on interest rates in the coming months.

In the U.S, the Labor Department said Friday the economy added 74,000 jobs in December, the smallest increase since January 2011 and well below expectations for 196,000 new jobs.

The unemployment rate fell to a five year low of 6.7% from 7% in November, but this was due in part to people dropping out of the labor force. The labor participation rate fell to an almost 35-year low of 62.8%.

Inclement weather in December contributed to the slowdown in hiring, as the construction sector cut 16,000 jobs, the biggest drop in the industry in 20 months.

The unexpectedly weak data tempered expectations that the Federal Reserve would cut its stimulus program again this month. The Fed cited a stronger labor market in its decision to cut its asset purchase program by USD10 billion in December, reducing it to USD75 billion-a-month.

Elsewhere, the CFTC Commitments of Traders report for the week ending January 7 showed that speculators have been aggressively shorting the Canadian dollar. Gross shorts have risen to 91,000 contracts, up 4,915 from the previous week.

In the week ahead, investors will be closely watching U.S. data on retail sales, inflation and consumer sentiment, as well as speeches by two Federal Reserve officials on Tuesday.

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

Monday, January 13

The Bank of Canada is to release its quarterly business outlook survey, a leading indicator of economic health.

Tuesday, January 14

The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The nation is also to release data on import prices and business inventories. Also Tuesday, Federal Reserve Bank of Philadelphia President Charles Plosser and Dallas Fed President Richard Fisher are to speak.

Wednesday, January 15

The U.S. is to release data on producer price inflation and a report on manufacturing activity in the New York region.

Thursday, January 16

Canada is to release data on foreign securities purchases.

The U.S. is to publish reports on consumer price inflation and initial jobless claims, in addition to data on manufacturing activity in Philadelphia. Meanwhile, Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington.

Friday, January 17

The U.S. is to wrap up the week with the closely watched preliminary reading of the University of Michigan consumer sentiment index. The U.S. is also to release data on building permits, housing starts and industrial production.

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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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