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USD/CAD Drops on Great Job Data – Parity in Sight

The Canadian economy gained 35,800 jobs, higher than expected. This sends USD/CAD to fresh lows, approaching the next support line. Update on the job figures and the currency’s strong week.

Early expectations stood on a rise of 30,800 jobs in Canada. The results exceeded expectations by about 15%. On the other hand, the unemployment rate unexpectedly rose from 8% to 8.1%. Traders focused on the more important Employment Change figure:USD/CAD dropped from around 1.0330 before the release to 1.0286, just above the 1.0280 support line that proved itself once again. This line became stronger.

The next levels below are 1.02, 1.01 and the ultimate support line – parity. Above 1.05, the 1.0680 line provides strong resistance, followed by 1.0750 and 1.0850.

Last month’s job figures were disappointing, as Canada lost jobs and the unemployment rate went back up from 7.9% to 8%.

This was a busy week for loonie traders. It began with a smaller-than-expected drop in Building Permits and continued quickly with a bigger event. The Bank of Canada raised the interest rates for a third time in a row to 1%. There was a clear consensus about this move – so the reaction was strong. USD/CAD dropped from just below 1.05 to around 1.04. The Canadian dollar then got a boost from the Ivey PMI, that jumped to 65.9 points, 10 points higher than earlier expected.

Since then, 1.04 capped the Canadian dollar, and it traded between this resistance line and 1.03, just above the next support line at 1.0280.

The day isn’t over yet for the Canadian dollar – Mark Carney, head of the BOC, will be part of a panel in a conference in Calgary. Any comments about the economy will rock the markets just as traders close positions before the end of the week.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.