USD/CAD Fundamental Forecast – September 2, 2016

The USD/CAD is trading at 1.3115 up by 7 points as the CAD is weighed down by lower oil and gold prices but a slightly better manufacturing PMI report from China this morning helped support commodity currencies.
US numbers continues to enjoy a solid week. The ADP Nonfarm Employment Change was little changed in August, posting a gain of 177 thousand. This beat the forecast of 174 thousand, the third straight month the indicator has exceeded the forecast. This release precedes the all-important official Nonfarm Employment Change report on Friday. On the housing front, Pending Home Sales gained 1.3%, well above the forecast of 0.7%, marking a 3-month high. On Tuesday, CB Consumer confidence jumped to 1o1.1 points in August, above the forecast of 99.7 points. It marked the indicator’s highest level since September 2015 and points to strong confidence on the part of the US consumer.
A September rate hike is back on the table, following an upbeat speech from Fed chair Janet Yellen last week at the Jackson Hole summit. Yellen’s message to the markets was refreshingly clear, as she said that the case for a rate increase had “strengthened in recent months”. Yellen noted that the key economic indicators were performing well – the labor market was approaching maximum employment, inflation was steady, and consumer spending remained solid.

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