The Canadian dollar is trading sideways in the Wednesday session. In the North American session, USD/CAD is trading at 1.2875, up 0.06% on the day. On the release front, Canada releases Ivey PMI is expected to rise to 62.3 points. In the U.S, the key event is unemployment claims, which is expected to remain unchanged at 214 thousand. On Friday, employment data will be in the spotlight on both sides of the border. Canadian employment change is expected to rebound with a strong gain of 25.0 thousand. In the U.S, we’ll get a look at wage growth and official nonfarm payrolls.
U.S employment numbers kicked off on a high note, as ADP nonfarm payrolls jumped 230 thousand in September. This marked the strongest increase in private sector jobs since March. The red-hot labor market will have to ease sometime, and the markets are braced for some soft numbers on Friday. Wage growth is expected to drop from 0.4% to 0.3%, while nonfarm payrolls is forecast to fall from 201 thousand to 185 thousand. Traders should be prepared for some movement in the currency markets during Friday’s North American session.
After months of intense negotiations, Canadian and U.S officials have finally hammered out a trade deal, which paves the way for a new trade agreement between Canada, Mexico and the United States. The NAFTA agreement, which was a pillar of the Canadian economy for 24 years, gives way to the USMCA – the U.S-Mexico-Canada Agreement. Canada and the U.S both offered concessions in order to reach a deal. Canada’s auto sector, which is highly dependent on cross-border movement, will be shielded from U.S tariffs. In return, U.S farmers will be granted increased access to Canada’s dairy market, which has been highly protected. The new agreement is expected to be signed in November and must then be ratified by the legislature of all three countries. This means that the provisions of the USMCA are not expected to go into effect before 2020. The agreement boosted the Canadian dollar, which has shown strong gains of late – the currency has jumped 2.4% since mid-September.
