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IronFX Intraday Comment | USD/CAD | 06/11/2015

• The dollar traded mixed against its G10 counterparts during the European morning Friday, ahead of the US employment report for October. It was higher against GBP and CAD, in that order, while it was lower vs NOK. The greenback was virtually unchanged against EUR, JPY, NZD, AUD, SEK and CHF.

•The UK industrial output rose 1.1% yoy in September, a slowdown from 1.8% yoy the month before. The reading was below the forecast of 1.3% yoy and it showed that the country’s industrial sector ended the third quarter on a soft patch. Following the slowdown in the UK GDP for Q3, which was mainly driven by the weakness in the manufacturing and construction sectors, we see the weakness in growth confirmed by the individual data as well. Coming on top of the lower medium-term growth and inflation prospects GBP is likely to remain under selling pressure, at least until we see improvement in the economic data.

•The Canadian dollar was slightly weak ahead of Canada’s employment report for October. While the unemployment rate is expected to have remained unchanged at 7.1%, the net change in employment is expected to have declined to 10.0k from 12.1k. Given that the Canadian job report is released at the same time as the US report, the initial reaction on USD/CAD could mainly be due to the latter. Afterwards, the focus will shift on the Canadian figure to either counter the initial impact or add further strength to the reaction. We would expect a disappointing unemployment report from Canada, along with strong US data to push on USD/CAD higher.

•USD/CAD traded somewhat higher during the European morning Friday. The rate is now headed towards the resistance zone of 1.3200 (R1), where an upside break would confirm a forthcoming lower low and is likely to open the way for the next resistance at 1.3250 (R2). Our short-term momentum studies detect upside momentum and support that USD/CAD could trade higher. The RSI lies above its 50 line and points north, while the MACD, stands above both its zero and trigger lines, pointing up as well. A strong US labor report combined with weak Canadian employment data could be the catalyst for a move above the 1.3200 (R1) zone. On the daily chart, I see that on the 16th of October, the pair rebounded from the medium-term uptrend line taken from the low of the 14th of May. This keeps the longer-term outlook positive as well and increases the possibilities for the pair to trade higher in the foreseeable future.

•Support: 1.3140 (S1), 1.3080 (S2), 1.3045 (S3)

•Resistance: 1.3200 (R1), 1.3250 (R2), 1.3290 (R3)



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