USD/CAD rebounded from lows and won back losses

On Thursday, the US dollar regained ground against the Canadian dollar after the publication of upbeat data on benefits for unemployment in the US, as well as a disappointing report on the volume of permits for construction in Canada.
In early US trade, the pair USD/CAD rebounded from 1.2851, the session low, to 1.2902, gained 0.10%.
The pair was likely to receive support at 1.2818, Wednesday's low and resistance at 1.2934, the high of September 6th.
US Department of Labor said, that the number of initial applications for unemployment benefits for the week ending September 3 fell by a seasonally adjusted 4,000 to 259,000 from 263,000 the previous week. Analysts had forecast for a decline of 2,000 to 265,000.
However, sentiment on the dollar remained fragile after the release of weak employment data in the United States on last Friday, as the expectations for rate rise by the Federal Reserve have lowered.
Also on Thursday, Canada's Statistics reported that the amount of issued building permits rose by 0.8% in July, while they were expected to grow by 0.3%. In June, the volume of building permits declined by 5.3%, the value was revised from the preliminary 5.5%.
But the commodity "Canadian" was supported against the background of rising oil prices, as market participants expect fresh weekly information on US stockpiles of crude oil and petroleum products.
Canadian fell against the euro, EUR/CAD rose by 0.86% to 1.4608.

The new "stone in the garden" of the US economy

US economic data continues to disappoint market participants. Yesterday was published the index of activity in the service sector ISM in August. Its value greatly disappointed market participants - figure dropped to a mark of 51.4 from 55.0 in July. This was the worst result for the last 6 years.
US dollar responsed to the data with weakness on all fronts. The EUR/USD in a wave of purchases broke through psychological barrier near 1.1200 and it is now in the 1.1250-60 area, intending to continue to grow.
In the past few days, there was enough evidence, that the US economy remains far from being in the state, which would allow to successfully survive the increase in Fed rates. The labor market, according to the Friday's NFP, is growing with uneven pace, inflationary pressures are not observed, and economic activity is reduced. This may force the US Federal Reserve to postpone the resumption of the cycle of rate hikes until next year.
Any new signs of recession in the US economy would immediately lead to a selling USD, so the major currency pairs will be subject to high volatility.

Free webinar: "Trading the US Indices"

On September 8 there will be a very useful free "Trading the US Indices".
The Pro Trader Paul will provide us introduction into trading the US indices markets.
Time: 7pm-8pm Cost: Free Place: Online
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September 15: "The Four Pillars of Personal Success at Trading";
September 22: "Live Trading Analysis - FX, Commodities & Indices".
For more information and registration, visit here.

China and Risk Off

For a long time, the Chinese economy is not mentioned in the world's main lobby, which publish the first negative signals for the dynamics of financial markets. Neither GDP growth nor the last publication on inflation, no data on the index of business activity are a factor for adverse movement of risk assets.
Many financial market participants are talking about the upcoming US presidential elections, raising the Fed's rates, Bank of Japan's decision on the new incentive program, Brexit and so on. The existence of a major player in the current global market - China, all forgotten. As a rule, unexpected negative news can cause large fluctuations in the financial markets. Chinese "miracle" last August is still fresh in the memory, when global trade demonstrated aggressive drop in prices down. A similar situation was in the beginning of this year, and once again the reason was the Celestial Empire.

Unemployment in the European Union stabilized in July

Unemployment in the 28 countries - members of the European Union stabilized in July for the third consecutive month, to a 7-year low of 8.6 percent.
EU unemployment rate in July remained at the level from June - 8.6% and below the level of 9.4% a year earlier. Thus European unemployment remains for the third consecutive month at its lowest level since March 2009, according to Eurostat.
According to European statistics, a total of 21.063 million Europeans were unemployed in July, compared to June is a marked decrease of the unemployed in the EU with 29 000 and 1.688 billion compared to July 2015.
The lowest unemployment rate in July was registered in Malta (3.9%), followed by the Czech Republic (4.2%) and Germany (4.2%), while the highest was unemployment in Greece (23.5%) and Spain (19.6%).
In July, a total of 4.276 million young people aged under 25 were unemployed in the EU, this represents a decrease in youth unemployment by 310,000 compared to July 2015.

Business activity in the British manufacturing sector improved surprisingly sharply in August

Business activity in the British manufacturing sector improved surprisingly sharply in August to a 10-month high after a dramatic drop to 41-month low in July. The reason was that industrial companies in the country seemed to have recovered from the initial shock of the decision of Britain to leave the EU and managed to increase their export orders, and found support from the sharp depreciation of the British pound after news for Brexit, say analysts.
The industrial PMI index in UK grew strongly in August to 53.3 points from 48.3 points in July with expectations by financial markets for index level of 49.0 points. This is the highest level of the index for 10 months.
Index PMI, which measures industrial new export orders, rose from 51.4 points in July to 54.9 points in August, reaching the highest level since June 2014, while the index for industrial production rose to a 7 month high.
Now on focus is the research by agency Markit about the activity in the UK services sector in August, which will be announced early next week.

How the employment report will affect the dollar?

In anticipation of today's release of the report on employment in the non-farm sector of the US, investors have started to fix profit on their long positions on the dollar. The release from positions has been associated with a weak index of manufacturing activity from the ISM, but today will be a tense day, so some traders also decided to reduce their dollar assets. Officials from the Federal Reserve made it clear, that the decision about raising interest rates in September will largely depend on today's labor market report. If the increase in the number of employees exceeds 200 thousand and the unemployment rate will remain unchanged or fall, expectations about rate hikes in the next month will increase, causing a full-scale dollar strenghtening, wich would bring USD/JPY at the highest level for the month. If the figures are quite high, USD/JPY could even reach 105. However, if the report disappoint, the dollar can meet a nasty correction after rising last month. Stronger than all the dollar would fall to the British pound and the New Zealand dollar - the two currencies, which showed particularly good results in the eve the publication of the report.