Global macro overview for 07/08/2017

Global macro overview for 07/08/2017:

A mixed set of data was released from Canada. The Statistics Canada reported that the labour market added 10.9k jobs in July, which was below the expected 13.1k gain. On the other hand, the unemployment rate fell to 6.3%, while market participants expected an unchanged reading of 6.5%.

Last month, the Bank of Canada decided to hike the interest rate from 0.5% to 0.75%, which was the first rate hike since 2010. More importantly, the BoC did not close the road for further tightening. In the current situation, the surprisingly lower unemployment rate is supporting the Bank of Canada's intention for one more rate hike in October. The other important factor is that the inflation expectations remained below the target, but the bank expects this to be due mostly to temporary factors such as competition in food prices and electricity rebates and still sees the inflation to hit 2.0% by the end of 2018. The next CPI data are scheduled for release on 18th of August, so global investors might start to price in the possible better than expected figures that would again justify the BoC interest rate hike.

Let's now take a look at the USD/CAD technical picture on the H4 timeframe. The market bounced from the technical support at the level of 1.2416 and currently is trading just below the technical resistance at the level of 1.2682. The market conditions are starting to become a little oversold at this timeframe, but there is still no divergence between the price and the momentum indicator. The overall trend remains bearish.

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