Mid-Day Report: CAD Rebounds Further on Corrected July Job Data

Canadian dollar extends this week’s rebound as the Statistics Canada released corrected job market data for July, which lifted the sentiments towards the Lonnie. In July, 41.7k jobs were added to the economy. That was firstly, much better than the originally reported wrong number of 0.2k. Secondly, it was also much better than the market expectations of 25.4k. Unemployment rate was uncorrected at 7.0%, down from June’s 7.1%. The mistake was due to the failure to run a program, which is part of the scheduled update to the survey. Hence, there were uncounted full-time workers. Also released from Canada, manufacturing shipments rose 0.6% mom in June.

Elsewhere, the stock markets also continued to recover on easing geopolitical tensions. DJIA opened mildly higher and is trading 38 pts up at the time writing. SP 500 also opened higher and is up 6.6pts currently. European indices are also trading in positive region with FTSE up 0.73% DAX up 0.97% and CAC up 1.04%. Yen extends recent weakness on improved risk sentiments.

Released from US, empire state manufacturing index dropped more than expected to 14.7 in August. PPI slowed to 1.7% yoy in July versus expectation of 1.8% yoy while PPI slowed to 1.6% yoy, inline with consensus. TIC capital flow showed USD -18.7b outflow in June. Industrial production rose 0.4% in July versus expectation of 0.3%. U of Michigan consumer sentiment dropped to 79.2 in August versus expectation of rise to 83.0. UK GDP was unrevised at 0.8% qoq in Q2.

Daily Pivots: (S1) 1.6663; (P) 1.6679; (R1) 1.6702; More

No change in GBP/USD’s outlook. Intraday bias remains on the downside and sustained trading below 1.6692 key support will confirm larger reversal. And in that case, the fall from 1.7190 medium term top should target 1.6251 cluster support (38.2% retracement of 1.4813 to 1.7190 at 1.6282). On the upside, break of 1.6844 resistance is needed to signal short term bottoming. Otherwise, outlook will stay bearish in case of recovery.

In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161. Based on unconvincing medium term momentum, we’d expect strong resistance from 50% retracement from 2.1161 to 1.3503 at 1.7332 to limit upside and bring reversal. Sustained break of 1.6692 will indicate medium term reversal and would turn outlook bearish for 1.4813 support.

GBP/USD 4 Hours Chart

GBP/USD Daily Chart

GMT
Ccy
Events
Actual
Consensus
Previous
Revised
08:30
GBP
GDP Q/Q Q2 P
0.80%
0.80%
0.80%

08:30
GBP
Index of Services 3M/3M Jun
1.00%
1.00%
1.00%

12:30
CAD
Manufacturing Shipments M/M Jun
0.60%
0.50%
1.60%

12:30
USD
Empire State Manufacturing Aug
14.7
20
25.6

12:30
USD
PPI M/M Jul
0.10%
0.10%
0.40%

12:30
USD
PPI Y/Y Jul
1.70%
1.80%
1.90%

12:30
USD
PPI Core M/M Jul
0.20%
0.20%
0.20%

12:30
USD
PPI Core Y/Y Jul
1.60%
1.60%
1.80%

13:00
USD
Net Long-term TIC Flows Jun
-18.7B
27.3B
$19.4B
18.6B
13:15
USD
Industrial Production Jul
0.40%
0.30%
0.20%
0.40%
13:15
USD
Capacity Utilization Jul
79.20%
79.20%
79.10%

13:55
USD
U. of Michigan Confidence Aug P
79.2
83
81.8

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