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    IronFX Intraday Comment | USD/CAD | 05/02/2016

    • The dollar traded mixed against its major counterparts during the European morning Friday. It was higher against GBP and NOK in that order, while it traded lower vs NZD and CHF. The greenback remained virtually unchanged against EUR, SEK, AUD, CAD and JPY.

    • With no major releases so far, investors’ eyes remain on the US employment report for January. The report is expected to show a 190k increase in nonfarm payrolls, an unchanged unemployment rate and rising average hourly earnings on a monthly basis. Overall, this points to another solid report, which would be in line with the statement of the Fed’s latest meeting. Back then, officials judged that employment indicators will continue to improve this year. Something like that could bring forward some expectations for a Fed hike in March and could cause the greenback to erase some of the losses it recorded the last couple of days. On the other hand, a disappointing report on top of the recent comments from Fed officials Fisher and Dudley could take March off the table completely. In this case, the dollar could extend its recent plunge.

    • Canada’s unemployment rate for January is also coming out, and it is forecast to have remained unchanged at 7.1%. 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, especially if any surprise arises in the US data. Afterwards, the focus will shift on the Canadian figure to either counter the initial impact or add further strength to the reaction. It is worth mentioning however, that given the decline in revenues and investment in the country’s energy sector, we see increased possibilities for a disappointment in the unemployment rate.

    • USD/CAD traded somewhat lower during the European morning Friday after it hit resistance at the 1.3760 (R1) line. On the 4-hour chart, the price structure still suggests a downtrend and therefore, I would expect a clear dip below the 1.3630 (S1) support line to open the way for the psychological zone of 1.3500 (S2). Nevertheless, taking a look at our oscillators, I see the likelihood for the next move to be an upside corrective wave. The RSI exited its below-30 territory, while the MACD, although negative, has bottomed and looks able to move above its trigger line soon. A move above 1.3760 (R1) could initially aim for the 1.3820 (R2) resistance and then for the 1.3930 (R3) obstacle. Switching to the daily chart, I see that USD/CAD is still trading above the medium-term uptrend line taken from the low of the 14th of May 2015. Therefore, I would consider the longer-term path of the pair to stay positive and I would treat the short-term downtrend started on the 20th of January as a retracement for now.

    • Support: 1.3630 (S1), 1.3500 (S2), 1.3415 (S3)

    • Resistance: 1.3760 (R1), 1.3820 (R2), 1.3930 (R3)

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