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Elliott Wave Analysis: USDCAD Intraday View
USDCAD is at new low after CAD data came out 45.3K vs 11.4K. We adjusted the wave count a little, but still see pair in fifth wave which means it can be final leg within higher degree impulse. There is a chance for a bounce early next week, up from 1.2820/50 in three waves.
USDCAD, 1H
Trade Idea: USD/CAD – Sell at 1.3010
USD/CAD - 1.2899
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway with wave iii ended at 1.4690, wave v of C may bring one more marginal rise probably in 2018
Trend: Near term down
Original strategy :
Sell at 1.3115, Target: 1.2915, Stop: 1.3175
Position: -
Target: -
Stop: -
New strategy :
Sell at 1.3010, Target: 1.2850, Stop: 1.3070
Position: -
Target: -
Stop:-
As the greenback has fallen again after brief recovery, suggesting recent selloff from 1.3794 top (wave c of larger degree wave b top) is still in progress and bearishness remains for further decline to 1.2870, then 1.2850, however, loss of downward momentum should prevent sharp fall below 1.2800, risk from there has increased for a rebound to take place later.
In view of this, would not chase this fall here and would be prudent to sell the pair again on recovery as 1.3010-15 should limit upside. Above 1.3070-75 would defer and suggest low is formed, bring a stronger rebound to 1.3115-20 and possibly towards previous support at 1.3165 (now resistance) but only break there would signal a temporary low is formed instead, then test of another previous support at 1.3212.
To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.
Trade Idea Update: USD/CHF – Buy at 0.9555
USD/CHF - 0.9637
Original strategy :
Buy at 0.9555, Target: 0.9655, Stop: 0.9520
Position : -
Target : -
Stop : -
New strategy :
Buy at 0.9555, Target: 0.9655, Stop: 0.9520
Position : -
Target : -
Stop : -
Although the greenback retreated after rising to 0.9688 and near term downside risk remains for initial weakness to 0.9580, reckon last week’s low at 0.9552 would limit downside and bring another rebound later, above 0.9660 would signal the retreat from 0.9688 has ended and bring test of this level, break there would signal low has been formed at 0.9552, bring retracement of early decline to 0.9700 and later towards resistance area at 0.9738-43.
In view of this, we are inclined to buy dollar on further fall. Below said support at 0.9552 would signal recent decline has resumed instead, then weakness to 0.9520-25 would follow but reckon 0.9500 would hold on first testing.
Trade Idea Update: GBP/USD – Stand aside
GBP/USD - 1.2884
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 1.2922
Kijun-Sen level : 1.2924
Ichimoku cloud top : 1.2927
Ichimoku cloud bottom : 1.2926
New strategy :
Stand aside
Position : -
Target : -
Stop : -
The British pound has slipped again after meeting renewed selling interest at 1.2984 and broke below previous support at 1.2893, suggesting top has been formed at 1.3030, hence consolidation with downside bias remains for retracement of recent upmove and weakness to 1.2850, then 1.2830-35 (50% Fibonacci retracement of 1.2640-1.3030) but reckon 1.2789-94 (61.8% Fibonacci retracement and previous support) would hold from here.
In view of this, would not chase this fall here and would be prudent to stand aside for now. Above 1.2920-25 would brig recovery to 1.2950 but only break of 1.2984 would signal the pullback from 1.3030 has ended, bring subsequent retest of this level possibly next week.
Trade Idea Update: EUR/USD – Buy at 1.1335
EUR/USD - 1.1393
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 1.1411
Kijun-Sen level : 1.1410
Ichimoku cloud top : 1.1355
Ichimoku cloud bottom : 1.1350
Original strategy :
Buy at 1.1355, Target: 1.1455, Stop: 1.1320
Position : -
Target : -
Stop : -
New strategy :
Buy at 1.1335, Target: 1.1440, Stop: 1.1300
Position : -
Target : -
Stop : -
As the single currency has retreated after faltering below resistance at 1.1446, suggesting consolidation below this level would be seen and pullback to 1.1355-60 cannot be ruled out, however, reckon support at 1.1312 would limit downside and bring another rise later, above said last week’s high at 1.1446 would confirm recent upmove has resumed for headway to 1.1475-80 but price should falter below 1.1500.
In view of this, we are looking to buy euro on dips but one should exit on subsequent rally. Below said support at 1.1312 would abort and signal top has been formed at 1.1446, bring retracement of recent rise to 1.1292 (previous support as well as 50% Fibonacci retracement of 1.1139-1.1446), then towards 1.1270.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 112.85; (P) 113.14; (R1) 113.57; More...
Intraday bias in USD/JPY remains on the upside for 114.36 resistance. Decisive break there will confirm our bullish view that corrective pull back from 118.65 has completed at 108.12. In that case, further rally would be seen to retest 118.65. On the downside, break of 112.88 support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.
In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85.
Trade Idea Update: USD/JPY – Stand aside
USD/JPY - 113.83
New strategy :
Stand aside
Position : -
Target : -
Stop : -
Although the greenback has risen again and broke above resistance at 113.69 and initial upside risk remains for recent upmove to extend gain to 114.00, loss of momentum should prevent sharp move beyond 114.25-30 and reckon 114.50-55 would hold from here, risk from there has increased for a retreat to take place later.
In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below the Kijun-Sen (now at 113.49) would bring pullback to 113.10-15 but only break of support at 112.74-88 would signal top is formed, bring correction of recent rise to 112.60, then 112.40.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 0.9583; (P) 0.9622; (R1) 0.9643; More......
Intraday bias in USD/CHF is turned neutral again with current recovery. Consolidation from 0.9551 might extend but upside should be limited by 0.9770 resistance to bring fall resumption. Break of 0.9551 will extend the decline from 1.0342 to 0.94443 key support level. At this point, we'd expect strong support from there to bring rebound.
In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.2930; (P) 1.2957; (R1) 1.2995; More...
GBP/USD's correction from 1.3029 extends lower today but outlook is unchanged. We'd expect downside to be contained by 1.2849 support to bring rise resumption. Above 1.2982 minor resistance should turn bias back to the upside for 1.3047 resistance. Break will target 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168 next. However, sustained break of 1.2849 will dampen our near term bullish view and turn focus back to 1.2588 support.
In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is now in favor, overall outlook remains bearish as long as 1.3444 key resistance holds. Larger down trend from 1.7190 is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.
A Solid End to the Second Quarter for Canadian Employment
June saw the Canadian economy add 45.3k net jobs. More Canadians joined the labour market, but the strong job gains were enough to offset this impact, leading the unemployment rate a tick lower, to 6.5%.
Job gains were concentrated in part-time positions, up 37.1k, while full time work added 8.1k net jobs. The employee/self-employed mix was nearly half-and-half, as 23.9k net employment positions were added, versus a 21.4k gain in self-employment.
The private sector led the gains in employees for a second month in June, adding 17.8k, while the public sector created a net 6k positions.
June saw fairly wide-spread gains in employment across the major sectors. On the goods-producing side of things, 16k positions were added, led by agriculture (+12k), with more modest gains reported across most of the other categories. Among the service-producing industries (+29.2k), professional services led the way (+27k), offset somewhat by declines in business support services (-15.1k) and transportation (-7.4). Modest job gains were seen in most of the other major service sectors.
Looking across the country, Quebec and B.C. led the charge, adding 28.3k and 19.7k respectively. Among the remaining provinces, it was a mixed bag of generally flat performances, excluding Alberta, which added 7.5k net jobs in June.
Aggregate hours worked ticked up somewhat in June, up 1.4% year-on-year. Continuing the trend that has emerged this year, hourly wage growth remained soft, rising just 1.0% year-on-year.
Key Implications
The Canadian economy again defied expectations, turning in another month of solid job gains. While the employment mix was heavy on part-time job gains, another tick higher in the participation rate, and a decent expansion of hours worked were both encouraging to see.
If there is a fly in the ointment, it is again the stubborn lack of wage pressures despite solid job gains (+186k year-to-date, driven entirely by full-time work) and a robust economic backdrop.
Further, hiding beneath the solid figures are regional divergences, with soft employment figures (including wages) in Ontario adding the list of concerns, particularly given recent moves in housing markets and the province's reliance on real estate as a driver of growth.
Today's jobs figures are the last major piece of economic data before the Bank of Canada's interest rate decision on Wednesday (June 12th). However, this report is unlikely to carry much weight on their decision, given it continues the trend of robust job gains, and the weak wage backdrop was present ahead of the change in communication strategy last month.
Indeed, a sharp hawkish swing in the tone of communication in June, further reinforced this week, suggests that despite a lack of inflationary pressures (let alone a 'bottoming out' of inflation), the Bank's policy interest rate is going up, and the market has already braced for this by pricing in a hike for next week.