“¢ Disappointing headline NFP print offset by an upward revision of previous month’s reading.
“¢ Unemployment rate falls to 3.7% and wage growth data matched market expectations.
“¢ Positive assessment of the US labour market report provides a short-lived boost to the USD.
“¢ Upbeat Canadian jobs data further collaborates towards keeping a lid on any runaway rally.
The USD/CAD pair quickly reversed a knee-jerk slide to sub-1.2900 level and rallied over 65-pips to fresh weekly tops post-US/Canadian jobs data, albeit quickly retreated few pips thereafter.
The pair initially dropped to an intraday low level of 1.2887 in reaction to disappointing headline NFP print, showing that the US economy added only 134K new jobs in September. The reading was much lower than 185K anticipated but was largely negated by a sharp upward revision of previous month’s already strong reading, now showing an addition of 270K jobs as against 201K reported earlier.
This coupled with a larger than expected dip in the unemployment rate and mostly in-line average hourly earnings growth reinforced market expectations that the Fed might continue raising interest rates, evident from a sudden pickup in the US Treasury bond yields.
The positive assessment of the US monthly jobs report overshadowed upbeat Canadian data, showing the number of employed people during September increased by 63.3K and unemployment rate ticked lower to 5.9%.
The US Dollar, however, failed to attract any meaningful buying interest, with the pair quickly retreating around 40-pips from weekly high level of 1.2955 touched in the last hour. Hence, it would prudent to wait for a strong follow-through buying before positioning for any further near-term up-move for the major.
Technical levels to watch
On a sustained move beyond 1.2950-55 area, the pair is likely to aim towards conquering the key 1.30 psychological mark before targeting the 1.3040 supply zone. On the flip side, the 1.2900 handle, closely followed by the very important 200-day SMA, near the 1.2875 region, now seems to protect the immediate downside, which if broken might accelerate the slide back towards the 1.2815-10 horizontal support.
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