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USD/CAD Pushes to New Highs after US/CAN Data

PPI m/m (Feb) -0.5%
Forecast: 0.2%
Previous: -0.8%

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Core PPI m/m (Feb) -0.5%
Forecast: 0.1%
Previous: -0.1%
Prelim. UM Consumer Sentiment (Mar.) 91.2
Forecast: 95.6
Previous: 95.4 (revised from 93.6)

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In the US inflation at factory gates remain negative. There’s no real deflationary concerns at the moment, but the lack of inflation could become an impediment to the FOMC’s rate hike plan. Meanwhile, we saw a dip in consumer sentiment based on the University of Michigan survey. This is still at high levels, but combined with the poor retail sales data we saw earlier in the week, there are some headwinds against USD-gains that are based on the FOMC raising rates around mid-year.

Employment Change (Feb.) -1.0K
Forecast: -3.5K
Previous: 35.4K

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Unemployment Rate (Feb.): 6.8%
Forecast: 6.7%
Previous: 6.6%

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Canadian jobs data was expected to decline. The unemployment rate was expected to rise. We didn’t see as much of a drop in the number of jobs, but the unemployment rate rose faster than expected. The Canadian jobs market has been inconsistent throughout 2014. This is nothing new, but the climb in unemployment rate since it hit 6.5% at the end of 2014, is a concern.

The market decided that there was more to worry about in terms of the Canadian job market. The US jobs market seem to be recovering well, except for wage growth. A strong recovery in employment can help lift demand, inflation, and the rest of the economy so even though both US and Canadian data were disappointing, the CAN jobs data was more concerning.

USD/CAD shook a little then pushed high, breaking the 1.28 resistance. There are still sellers here, but as long as price holds above 1.27, there is upside risk and the 1.28 will be vulnerable. Above 1.28, the next resistance is in the 1.30-1.3060 area, the 2008/2009-highs.

USD/CAD 4H Chart 3/13

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