Canada’s September employment data to rock the Looney

The USD seemed to stabilise against its counterparts yesterday and during today’s Asian session, as conflicting data surfaced. On the one hand, the US CPI rates for September came in hotter than expected, implying a resilience of inflationary pressures in the US economy, which was a supportive element for the greenback. On the other the weekly US initial jobless claims figure came also higher than expected reaching a record one-year high level, highlighting the further easing of the US employment market, thus clipping any gains for the USD. The releases left traders pondering about the Fed’s intentions and confusion spread as Fed policymakers send out mixed signals as well. Today, we expect the release of the US PPI rates for September to be closely watched as Fed policymakers’ speeches which could sway the market’s mood.

In today’s American session, we highlight the release of Canada’s September employment data. The unemployment rate is expected to tick up to 6.7%, despite the employment change figure being expected to rise to 27.0k if compared to August’s 22.1k. Should the actual rates and figures meet their respective forecasts, we may see them weighing on the Loonie as the constant rise of the unemployment rate despite the gains in jobs created may also intensify the dovish tendencies of the BoC.

On a technical level, the Loonie continued to weaken against the USD with USD/CAD testing the 1.3775 (R1) resistance line. We tend to maintain a bullish outlook for the pair given that the upward trendline guiding the pair since the 2^nd of October remains intact and that the RSI indicator has reached the reading of 70, implying a strong bullish sentiment of market participants for the pair. Yet we also have to note that the price action is constantly above the upper Bollinger band in a sign that the pair may be at overbought levels and ripe for a stabilisation or even a correction lower. Similar signals are coming from the RSI indicator reaching the reading of 70. Should the buying interest be extended we may see the pair breaking the 1.3775 (R1) resistance line and aiming for the 1.3895 (R2) resistance base. Should the bears take over, we may see the pair reversing course, breaking initially the prementioned upward trendline, signaling an interruption of the upward movement and actively start aiming for the 1.3590 (S1) support line.

From China we get the inflation metrics for September on Sunday, and the forecasts are highlighting the deflationary pressures on a producer level that could weigh on the CNH. On Monday’s Asian session, we highlight the release of China’s trade data for September. The trade surplus of August is expected to narrow, the import growth rate to accelerate and the export growth rate to slow down. Should the actual rates and figures meet their respective forecasts, we may see CNH retreating in Monday’s Asian session, while Aussie traders may be encouraged by the prospect of more Australian exports into China, thus a possible acceleration of China’s import growth rate could support the Aussie.

AUD/USD’s drop over the past days, seems to have come at a halt at the 0.6715 (S1) support line yesterday. Given also that the downward trendline guiding the pair since the 30 of September comes under threat we switch our bearish outlook for the time being in favor of a sideways motion bias initially. Should the bears regain control over the pair we may see AUD/USD breaking the 0.6715 (S1) support line and aiming for the 0.6575 (R2) level. Should the bulls take over, we may see AUD/USD actively aiming for the 0.6825 (R1) line.

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Today we get Germany’s final HICP rate for September, UK’s GDP rates for August, the US PPI rates for September and besides Canada’s September employment data we also get Canada’s August building permits growth rate, while a number of Fed policymakers are scheduled to speak. On Monday we get New Zealand’s electronic card sales growth rate for September.