Technical Bias: Neutral
- USDCAD rebounds, trades in the mid-1.24 region.
- US private sector added 201,000 payrolls in May, ADP reports.
- US trade deficit shrinks to $40.88 billion in April from $50.57 billion.
- Speculation about a new Greek bailout agreement intensify.
The USDCAD regained momentum on Wednesday after falling more than 100 pips the previous day, although underlying demand for the greenback remains relatively subdued amid hopes of a Greek bailout agreement.
The USDCAD climbed to a daily high of 1.2507, almost enough to retrace Tuesday’s 100-pip plunge. The pair would subsequently consolidate at 1.2453, advancing 0.4 percent. The hourly MACD shows a neutral bias for the USDCAD. Initial support is likely found 1.2452 and resistance at 1.2524.
US Employers Add 201,000 Private Payrolls in May
US job creation was back on firm footing in May, payrolls processor ADP reported on Wednesday. Employers added 201,000 private sector jobs last month following a downwardly revised gain of 165,000 in April. Most of the gains were concentrated in trade, transportation and utilities, professional and business services and construction. Meanwhile, manufacturers shed 5,000 jobs, ADP data showed.
On Friday the Labor Department is expected to show the creation of 220,000 nonfarm payrolls for the month of May, following a gain of 223,000 the previous month.
US Trade Deficit Narrows
The trade deficit narrowed more than forecast in April to $40.88 billion from $50.57 billion, the Commerce Department reported on Wednesday. A widening trade deficit in the first quarter weighed on gross domestic product, revised estimates showed last week. The US economy contracted 0.7 percent annually in the first quarter, the Commerce Department said last Friday.
Canada Trade Deficit Remains Steady
Canada’s trade deficit held steady at $3 billion in May compared with $3.02 billion in April. Exports fell slightly to $41.91 billion from $42.2 billion, while imports shrank 2.5 percent to $44.89 billion.
Talk of Greece Compromise Intensify
The euro rallied more than 2 percent on Tuesday on hopes that a new Greek bailout agreement would be reached before Friday’s payment deadline to the International Monetary Fund.
Greece’s troika of lenders – the IMF, European Central Bank and European Commission – on Tuesday drafted a new agreement to put forward to the Greek government in order to resolve the months-long impasse. According to reports, the new agreement were broken down into elements that were agreed to by technical experts and elements that had yet to be resolved.
Athens insists that is has not formally received any new proposals, but has vowed it will not be “blackmailed” into accepting any agreement.
According to the Financial Times, the new proposal would require Greece to post a primary budget surplus of 1 percent of GDP this year. This would be expected to increase to 3.5 percent in 2018.