On a medium-term bearish channel since the middle of the trades last week, the USDCAD is projected to continue to tread a downside pattern today. After a two-day rally fueled by the prospect of more Fed easing, the markets now focus on the jobless claims report from the world’s largest economy, as well as manufacturing and property market releases.

Stocks rose yesterday, as Federal Reserve Chairman Ben Bernanke testified a second day before a Congressional committee. The fed chief reiterated his view that though the economy has weakened, the Fed does not see a double dip recession. He assured the public that the Fed is committed to doing all it can to ensure progress in employment, and that it is ready to take action as needed.

July 6 brought news from the Labor Department that employers added just 80,000 jobs last month, less than the median forecast of 97,000, after a 77,000 increase in May. Payrolls excluding government agencies rose 84,000 after a 105,000 gain in May. The job growth last month was just about enough to keep up with population growth, but not nearly enough to reduce the backlog of 13 million unemployed workers.

Now that Bernanke has given his semi-annual testimony to Congress, traders are now presumed to turn their attention to earnings and the state of the economy. In fact, taking hints from equity price movements earlier during the day, Asian shares rose on strong corporate profits from the US which allayed fears of a slowdown in earnings, particularly for the beleaguered tech sector. European equities likewise climbed to an 11-week high and were on track for a seventh straight week of gains as upbeat earnings from companies such as Electrolux raised investors' appetite for riskier assets.

Further, the labor department is deemed to post a low figure for its Unemployment Claims report for the week ending July 14. Economists estimate a 367,000 number of individuals who filed for unemployment insurance for the first time during the past week. Though higher than last week’s surprising 350,000 figure, if the forecast holds true, this would still be the second lowest in the past 10 weeks. Though likely a result of seasonal considerations, traders are believed to be more apt to search for signs that of improvement in the economy; and this can be one of those.

Moreover, Home Resales in June is projected to have increased from 4.55 Million to 4.64 Million, which gives rise to hopes that the property market is making progress. Lastly, though still likely to indicate worsening conditions at a July projection of -7.9 points, the Philly Fed Manufacturing Index is coming off a -16.6 grade last month. This points to improving perceptions on general business conditions from surveyed manufacturers, thus could signal gains for risk-on assets. These reports are believed to boost the prospects of the higher-yielding Loonie in the day’s currency exchanges. As such, a sell bias looks apt for the USDCAD exchanges today.

Written for AlgosysFx