Home USD/CAD finds support near 1.34, looks to post small weekly losses
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USD/CAD finds support near 1.34, looks to post small weekly losses

  • Crude oil rebounds from monthly lows on Friday.
  • US Dollar Index turns south after disappointing PMI data.
  • Nonfarm payrolls in the U.S. beat expectations by a wide margin.

The USD/CAD spiked to a daily high of 1.3486 in the early NA session with the knee-jerk reaction to the U.S. April jobs report. However, the pair failed to preserve its momentum and came within a touching distance of the 1.34 handle as the greenback came under a renewed selling pressure amid dismal PMI figures. With the market action turning subdued toward the end of the week, the pair started to consolidate its daily losses and was last seen down 0.33% on the day at 1.3427. With today’s fall, the pair is looking to close the week in the negative territory as well.

The U.S. Bureau of Labor Statistics today announced that nonfarm payrolls in the U.S. increased by 263,000 in April to beat analysts’ estimate of 185,000 by a wide margin. Moreover, the unemployment rate dropped to its lowest level in nearly five decades at 3.6%. On the other hand, average hourly earnings rose only 0.2% in the same period and the labour force participation rate dropped to 62.8% from 63% to offset any potential positive reaction to the data.

Later in the day, the ISM and the IHS Markit both reported that the service sector PMI retreated from March readings to suggest a slower pace of growth in the sector’s business activity in April. Commenting on the data, “The final PMI surveys for April indicate a marked slowing of the US economy at the start of the second quarter, suggesting the robust start to the year has lost some momentum. Businesses reported the weakest output and sales growth for two years, indicative of GDP growth slowing to 1.9% in April,” said Chris Williamson, Chief Business Economist at the IHS Markit.

US: Markit Services PMI drops to 53 (final) in April, lowest reading in more than 2 years.

US: ISM Non-Manufacturing PMI edges down to 55.5 vs 57 expected.

With today’s drop, the US Dollar Index erased the majority of the run higher witnessed following the FOMC Chairman Powell’s optimistic remarks on the economic outlook. As of writing, the index was down 0.3% on the day at 97.54.

Meanwhile, after losing more than 3% on Thursday, the barrel of West Texas Intermediate staged a modest rebound and was last seen adding more than 1% on the day to provide additional support to the commodity-sensitive loonie.  

Technical levels to consider

 

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