- Unemployment in Canada drops to 5.4% in May.
- NFP data disappoints to weigh on the greenback.
- WTI rebounds to $54 area on Friday.
The selling pressure surrounding the USD/CAD pair intensified in the NA session following the labour market data releases from both Canada and the United States. The pair, which dropped to its lowest level since late March at 1.3264, was last seen trading at 1.3275, losing 0.65% on a daily basis. For the week, the pair is down nearly 250 pips.
Statistics Canada today announced that the unemployment rate in Canada dropped to 5.4% in May from 5.7% in April with the net employment in the same period increasing by 27,700 to surpass the market expectation of 8,000.
On the other hand, nonfarm payroll employment in the U.S. rose by 75,000 in May and fell short of the analysts’ estimate of 185,000. Furthermore, average hourly earnings increased 3.1% on a yearly basis following April’s 3.2% reading. With the soft wage inflation and the slowdown in NFP growth, investors continued to price possible Fed rate cuts and caused the greenback to weaken against its major rivals.
Following the disappointing data, the US Dollar Index slumped to its lowest level in 10 weeks at 96.46. and was last down 0.38% on the day at 96.62.
Commenting on the pair’s reaction to today’s events, “The FX market focused on the US jobs report, where a big miss on nonfarm payrolls helped to reinforce the recent correction in the USD while the Canadian data could offer some near-term support for CAD. The 200dma near 1.3274 is the next key pivot level,” TD Securities analysts said.
Meanwhile, hopes of Fed rate cuts seemed to help the market sentiment turn positive in the second half of the day and allowed the barrel of West Texas Intermediate to recover above $54 with a 2% daily gains and provided additional support to the commodity-related loonie.
Technical levels to watch for
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