USD/CAD climbs on weak Canadian jobs and oil slump
Decent risk appetite is the only thing keeping the Canadian dollar afloat today.
The Canadian employment report showed a loss of 40K full-time jobs in June and the only thing that knocked the unemployment rate lower was a fall in the participation rate to the lowest since 1999.
The future is also looking a touch bleaker today as WTI crude oil falls below $45 in the second day of declines. The break of the June triple bottom yesterday pointed towards more declines.
The trade that hasn't broken out yet is USD/CAD.
For the past two months, it's been consolidating in the 1.25 to 1.32 range. It's now threatening the top side as a triangle pattern threatens to break.
The big event in the week ahead is the July 13 Bank of Canada decision. Poloz has staked his central banking reputation on the theory that a weak CAD would lead to rising non-commodity exports and business investment.
Instead, Canada's trade deficit remains mired at the worst levels on record.
If he has a change of heart and that chart breaks higher, I expect a quick trip back to 1.40.
