Today's main event will be Canadian jobs were economists at TD Securities share the consensus view of a solid 175K rebound in June. With the Bank of Canada meeting next week and USD/CAD marking early signs of a bearish divergence, the loonie could be setting up for better days ahead.
Bearish divergence in RSI as 1.26 is rejected
“We look for the labour market to bounce back with job growth of 175K in June, recouping a significant part of the 275K jobs lost to COVID-19 lockdowns over April and May. Job growth of 175K will leave total employment ~400K below pre-covid levels and the unemployment rate testing the March lows of 7.5%.”
“While we are in line with the market on jobs, our expectation for a better unemployment reading could put a more positive spin on the data overall. Yesterday’s rejection of 1.26 in USD/CAD had certain hallmarks of an exhaustive move to the upside, but it is still a little early to tell. We are, however, seeing some signs of bearish divergence in the daily RSI, which could leave the pair a little exposed if today’s data does come in better than expectations.
“1.2518 should provide initial support, but we think the 1.2480/90 zone and 1.2430/45 could be significant near-term thresholds ahead of the 100-DMA (1.2378).”