By fxtimes.com
Technical Bias: Bullish
Highlights:
- USDCAD climbs around 140 pips to 1.2613, the highest level since mid-February.
- Canada’s trade deficit reaches a near-record $2.45 billion on slumping oil prices.
The USDCAD climbed to three-week highs on Friday, as the US dollar strengthened across the board following upbeat nonfarm payrolls, while Canada posted a bigger than expected trade deficit on the heels of declining energy exports.
The USDCAD advanced around 140 pips to 1.2622, its highest level since February 12. The pair faces near-term resistance at 1.2689. Immediate support is located at 1.2467.
The US dollar enjoyed broad support on Friday, with the dollar index climbing to fresh 12-year highs. In economic data, US nonfarm payrolls rose 295,000 in February, while joblessness declined from 5.7 percent to 5.5 percent, a six-and-a-half year low.
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North of the border, Canada’s trade deficit unexpectedly widened in January, as energy exports, mainly crude oil and bitumen, plunged 14.7 percent. The trade deficit widened from $1 billion to $2.45 billion, Statistics Canada reported in Ottawa. Excluding crude oil and crude bitumen, exports increased 0.2 percent, official data showed.
Lower energy prices weighed not only on exports, but export prices, which fell 1.5 percent. The unprecedented retreat in crude prices over the last eight months is expected to weigh on the Canadian economy in the first half of 2015, resulting in below-trend growth. The province of Alberta – home to Canada’s oil and gas sector – is expected to slide into a mild recession.
Canada’s economy appeared to have weathered the storm in the fourth quarter of last year, growing 2.4 percent annually.
Separately, Canadian building permits plunged in January, as non-residential construction intentions declined sharply. Building permits fell 12.9 percent from December, three times steeper than forecast. The value of non-residential construction intentions declined 22.8 percent, while the value of residential permits dropped 7 percent, official data showed.
The stars are aligning for a bigger rally for the USDCAD. A hot US jobs market, plunging energy prices and a sluggish Canadian economy will likely send the Canadian dollar to 75 cents US in the short-run.
By fxtimes.com
