Global macro overview for 11/09/2017

Global macro overview for 11/09/2017:

Better than expected Canadian jobs data surprised market participants. Canadian employment increased 22k in August which was slightly better than expectations of around 19k for the month and following a gain of 11k in July. Full-time employment declined sharply by 88k for the month following a 35k increase the previous month while there was a strong gain in part-time employment of over 110k following a decline of 24k the previous month. Altogether over the year, full-time employment increased by 213k (1.5% year to date), while part-time jobs increased 4.6% over the year. The unemployment rate declined further to 6.2% from 6.3% the previous month which was the lowest rate since October 2008.

There might be some concerns surrounding the decline in full-time jobs, although this drop was concentrated among young workers and may be a seasonal factor (students going back to college). The Bank of Canada should be pleased with the data as the recent interest rate hike might soon start to have an impact on the cooling job market and inflation. So far the BoC remains confident that the interest rate hike was timed perfectly and it should not greatly affect the other sectors of the economy in a negative way. The future monetary policy will be determined by the development of the economy with close attention paid to the sensitivity of the economy to higher interest rates given elevated household debt. The Canadian housing market is booming now, but there are some areas that are causing concerns and giving some fresh signs of a possible bubble, like Vancouver or Toronto (event compared to US housing market in 2007).

Let's now take a look at the USD/CAD technical picture on the H4 time frame. The market is trading in extremely oversold conditions, so a bounce towards the nearest technical resistance is expected to happen any time now. The key level to the upside is still the 61%Fibo at the level of 1.2342 and the supply zone between the levels of 1.2411 - 1.2440. As long as this area is not violated the long-term trend remains bearish. The nearest resistance is seen at the level of 1.2246.


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