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The Canadian enjoyed the commitment that the ECB president Mario Draghi presented for the euro, and finally managed to break to new levels.

USD/CAD fell under critical support and is now consolidating the gains. All-important employment data awaits both the US and Canada.

0.9840 was a very stubborn support line. USD/CAD couldn’t breach it despite numerous attempts. It has finally been taken out, and an attempt to recover was very limited – the pair fell short of reaching this level.

USD CAD Under Critical Support September 7 2012
USD CAD Under Critical Support – Click image to enlarge

Mario Draghi detailed the bond buying plan of the ECB called Outright Monetary Transactions (OMT). This includes unlimited bond buying of bonds that have a maturity of between 1 to 3 years.

In addition, positive figures from the US helped: ISM Non-Manufacturing PMI and ADP both surprised to the upside, raising expectations for the Non-Farm Payrolls.

American demand is critical to the Canadian economy and is more important than oil prices. A stronger US means a stronger Canada and usually a stronger Canadian dollar.

Non-Farm Payrolls are expected to show a gain of around 120K jobs. At the same time, Canada will release its own employment figures, with an expected gain of around 10K jobs and no change in the unemployment rate: 7.3%.

For more, see the Canadian dollar forecast.