Canadian employment data was slightly better than expected. This was the hay that broke the camel’s back – after a week of struggle, USD/CAD finally broke 1.02 and heads down to parity.
Canada’s employment figures surprised analysts for a second month in a row. Contrary to last month’s huge surprise, the numbers were only slightly better this time. Employment Change showed a gain of 20,900 jobs, better than 17,500 that was predicted. Only a small change.
The more significant release was the Unemployment Rate, that fell once again – from 8.3% to 8.2%, the lowest since April 2009. This continues the steady advance of the economy. Let’s see the impact on forex:
USD/CAD reacted with a fall off the cliff – it fell from 1.0215 to 1.0165 in a sharp and instant move. The initial reaction will probably be followed by a small correction, and then a continued move downwards.
USD/CAD is now at the lowest levels since July 2008. The 1.02 support line was the 2009 low (in October) and also approached twice in 2010: in mid January and during the last two weeks. During this week, USD/CAD gradually went down, approaching the line and retreating time after time.
The employment numbers took it below this line. No further support lines exist before the ultimate one: USD/CAD parity. The pair was around the parity line from September 2007 to July 2008, reaching the lowest level, 0.9056 in a swing move on November 7th, 2007.
Parity supplies huge support. If the pair breaks it, the next level is 0.98. If the current break under 1.02 isn’t confirmed, the next resistance line if 1.04, which worked as both support and resistance lines for a very long time.
Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.