Dollar Looks to Push Higher on Back of Jobs Report

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The Yen has enjoyed a boost this week, off the back of a Core Machinery Order which posted strong gains of 8.3%. That was well above the estimate of 3.4% and helped push the JPY up against the US dollar.

But the latest figures out of the Asian powerhouse weren’t all good. Admittedly the PPI was down 3.9%, but that was very close to the estimate so did little to rock the markets.

Meanwhile, data out of the US, specifically last week’s Non Farm Payroll, helped boost the US economy, after showing that the US added a whopping 255,000 jobs in July. When added to the 280,000 jobs the US created in June, you can see that the US remains the strong economy out of USDJPY pairing.

With that in mind, we are expecting the dollar to make gains against the yen this week, and are consequently going long in the markets for the foreseeable future.

Normally when the price of oil drops, which it did this week, the Canadian dollar also falls in it pairing against the US dollar. But that isn’t happening at the moment and there is one reason why this is happening – the Federal Reserve.

When the price of oil tanked, the Canadian dollar was able to decouple from the plunging prices and turn the shrinking possibility of a Fed rate hike against it’s neighboring currency. Despite the fact that the USD was able to gain momentum after the positive US Non Farm Payrolls restarted the debate for higher rates, economic indicators show that a rate hike in September isn’t likely. Retail sales expectation for this week are also expected to confirm that the job market has reached full employment in the States, which will in turn boost the CAD.

Going forward, despite the continued lows that are expected in the oil market, we can hope that the CAD will continue to win out against the dollar. The only thing that will alter this is if there is a sudden confirmation of a rate increase in September, and if analysts are to be believed this is looking like an increasingly unlikely event.

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