- Canadian Dollar climbs to highest level since July 31 against US Dollar.
- USD/CAD about to post first weekly decline since early July after reversing from two-month highs.
The USD/CAD dropped sharply following the release of the employment reports from Canada and the US. After a brief pause it resumed the decline and recently printed a fresh five-week low at 1.3157.
Date weight on USD/CAD
The US August jobs report showed the economy added 130K jobs, below the 158K expected and also lower than the 159K July reading. Wages rose more than expected and the unemployment rate remains at 3.7% despite an increase in the labor force.
In Canada, the economy created 81.1K jobs, well above expectations, having the second-best month since 2010. “The August employment report was well above expectations following a temporary lull in July and June. We take comfort that despite current global uncertainties, hiring from corporations has not been negatively impacted for now“, explained Matthieu Arseneau, analysts at National Bank of Canada.
Another positive factor for the Loonie during the American session has been a rebound in crude oil prices. Earlier the WTI barrel bottomed at $54.80 and now is back near $56.00. The positive tone toward risk appetite is also supporting the downside in USD/CAD on Friday.
Levels to watch
The pair has dropped below July lows and the next strong support might be located at 1.3140/45 and then 1.3110. A close around current levels would point to further losses. If the US Dollar manages to recover on top of 1.3200 the bearish pressure could eased. Above the next resistance levels might be located at 1.3280 (20-day moving average) and 1.3320.
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