Today, investors’ attention will be focused on the US labor market data for June, which will be released at 14:30 (GMT+2).
It is expected that the number of new jobs created outside the U.S agricultural sector June will grow by 175.000 jobs and unemployment rate will remain below the level of 5.0% (4.8% in June against 4.7% in May).
If this forecast proves to be correct or the data including hourly wages, will be better than expected, the USD will strengthen because this news will revive expectations of the market participants of the interest rate increase in the USA.
It is also worth noting that yesterday oil prices sharply went down after 17:00 when the US Department of Energy released weekly report the on stocks of oil and oil products in US stores. Oil prices fell to two-month lows, as the data showed that the reduction in stocks of oil and oil products, including gasoline, was below expectations.
At the closing session at NYMEX the price of oil fell by 4.8%. Spot price of crude oil Brent fell to the level of 47.10. The Canadian dollar, as a commodity currency, which is very vulnerable to the changes in the oil market, fell yesterday, following the trend in oil prices. Canada is an exporter of oil. The oil and gas sector is the most important part of the Canadian economy. Oil is an important source of export revenue for Canada and oil price is strongly correlated with the price of the Canadian dollar.
Oil prices are declining amid uncertainty of the world economic situation and investors’ concerns about the slowdown of the economy in Eurozone and reduction of oil consumption in Europe after Brexit.
The volume of the global oil production remains at a high level and demand overpaces supply.
If today’s data on the US labor market will be worse than expected, sales of the USD, including the pair USD/CAD will increase. Later today (at 15:30 GMT+2) Canadian data on the labor market will become known. It is expected that the number of jobs in June will increase by only 5.000, while unemployment rate will increase up to 7.0% from 6.9%. It is likely, that the Canadian dollar will ignore Canadian data on the labor market. However, US data on NFPR may have a strong impact on the pair USD/CAD.