OTTAWA: A poor start to the new year for the Pound to Canadian Dollar exchange rate which jas edged lower to 1.6572 on the first day of trade.
We are confident in our assessment of the pair that GBP/CAD continues to show a vulnerability to a breakdown.
A break below the 1.6450-70 support level which has underpinned the lows for most of December, would see the reestablishment of the dominant downtrend, and a probable move down to an initial target at 1.6830, at the S1 monthly pivot.
MACD is now below the zero-line indicating the pair is probably in a downtrend and supporting out bearish analysis. The 50-day moving average also no appears to have been breached – a further bearish sign. For the Canadian Dollar the main release will be employment data on Friday, January 6, at 13.30 (GMT).
The Employment Change is forecast to fall by -2.5k after a rise of 10.7k in the month before. The Unemployment Rate is forecast to rise to 6.9% in December, from 6.8% previously.
BK Asset Management’s Kathy Lien is more optimistic assessing a higher chance of an improvement in Canada’s employment data in December as data bounces back from previous relatively poor results.
Another major release is Ivey PMI – a general business gauge – at 15.00 (GMT) on Friday, January 6.
Balance of Trade data out at 13.30 on the 6th is expected to show a contraction in the size of the deficit to 1.13bn on the back of higher commodity prices. Manufacturing data is out on Tuesday, Jan 3, and Factory Gate inflation at 13.30 on Thursday, January 5.
