USD/CAD drops sharply toward 1.32 on strong Canadian jobs report

• Unemployment rate in Canada dropped to 5.5% in September from 5.7% in August.
• Crude oil prices cling to modest daily gains on Friday.  
• US Dollar Index slumps to multi-week lows below 98.50.

The USD/CAD pair came under strong bearish pressure in the early trading hours of the American session after the employment data from Canada came in better than expected. After losing more than 70 pips in a matter of minutes and touching its lowest level since early October at 1.3206, the pair recovered slightly and was last seen trading at 1.3215, losing 0.57% on a daily basis.

Upbeat Canadian jobs report supports the CAD’s rally

Statistics Canada on Friday announced that the unemployment rate in Canada dropped to 5.5% in September from 5.7% in August and bettered the market expectation of 5.7%. More importantly, the total number of employed rose 53,700 and surpassed experts’ forecast of 10,000 by a wide margin.

Additionally, heightened hopes of the United States (US) and China reaching a partial trade deal allowed crude oil prices to build on Thursday’s gains and provided an additional boost to the commodity-sensitive Loonie. At the moment, the barrel of West Texas Intermediate was posting modest daily gains near $54.

On the other hand, the sharp upsurge witnessed in the GBP/USD pair keeps the Greenback under selling pressure on Friday with the US Dollar Index dropping to its lowest level in three weeks at 98.24 and makes it difficult for the pair to stage a meaningful recovery.

The University of Michigan’s Consumer Confidence Index and Boston Fed President Eric Rosengren’s speech will be looked upon for fresh impetus later in the session.

Technical levels to watch for