- USD/CAD bears lurking below the 200-DMA.
- The Canadian jobs report was a strong headline figure although the details were somewhat mixed.
USD/CAD dropped on Friday, extending the downside from last week’s highs through 1.3380 and reached a low of 1.3158 following Canadian employment that surged by 81k in August, well above the market consensus for 20k. USD/CAD is opening the week at 1.3165.
The jobs report was a strong headline figure although the details were somewhat mixed and softer wage growth remains a concern as is the uncertainty around trade wars for which the Bank of Canada is keeping a close eye on.
“If, as we expect, there are positive developments on the trade front, the outlook for the global economy and oil prices would improve, negating the need for the Bank of Canada to cut rates. The loonie would then get a double boost, i.e. from yields and oil. As such, we are leaving unchanged our end-of-year target of 1.30 for USDCAD. But as we’ve seen this year, the Canadian dollar’s move towards that target is unlikely to be linear,” National Bank of Canada’s analysts argued.
NFP should contain Funds below 1.3220 resistance
Other data on Friday weighed on the Dollar in a soft US jobs number which is likely to keep the USD on its backfoot at the start of the week which leaves rallies a fade below and 1.3220 resistance. The US non-farm payrolls were weaker than expected for August, coming in at 130k against expectations of a 160k rise.
“Manufacturing payrolls were at 3k (from 4k in July) whilst trade, transport and utilities were down 11k after rising modestly in July. The US retail sector continued to shed workers. Average hourly earnings beat expectations, rising 0.4% m/m (from 0.3% m/m in July). Year-on-year, average hourly earnings rose 3.2% y/y (from 3.3% y/y in July). The unemployment rate remained steady at 3.7%,”
analysts at ANZ Bank explained.
USD/CAD levels
Bears are back below the 200-day moving average, now resting at the prior support/resistance 61.8% Fibo confluence. A continuation of the downtrend will be targetting the 1.28 handle – On the flipside, 1.3350 is the near-term target to break still on the upside which guards the 1.34 handle and mid-June highs.
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