- US Non-Farm Payroll 850k versus 725k expected on strong jobs growth% despite NFP beat
- Unemployment sees surprise rise to 5.9% instead of expected fall to 5.6%
- US Dollar Index falls into the red on data but currently trading little changed
Our USDCAD forecast notes that the pair has plunged and now it stands at 1.2382 level far below today’s high of 1.2449. The pair has escaped from an ascending channel signalling a downside movement.
Unfortunately, although NFP data beat expectations, unemployment still rose.
The US dollar has taken a hit from the US Unemployment Rate, which has increased unexpectedly from 5.8% to 5.9%, even though economists had expected a drop to 5.6%.
DXY drops on NFP beat, unemployment rise
The US Dollar Index (DXY) basket dropped precipitously to 92.39 after the US data, even though the Non-Farm Payroll data was reported at 850,000 higher versus the 725,000 estimate and compared to 583,000 in May. DXY at the time of writing is trading 0.09% lower at 92.51.
Anxiety the possibility of wage push inflation emerging was dampened somewhat by the earnings data coming in as expected, although the Average Hourly Earnings did increase by 0.3%. Reports of labour shortages in certain sectors and of employers having to pay ‘hire bonuses’ to attract staff suggest some tightening appear not to be borne out in the employment data.
The US economy all told is in pretty good shape, which forex traders are interpreting to mean that and inflation under control, so this is taken as confirmation there will be no interest rate rise anytime soon.
USDCAD forecast – technical analysis: resistance at 1.2438
USD/CAD has found resistance at the R1 (1.2438) level and is now trading back below the 61.8% retracement level. Yesterday, USDCAD registered a disappointing false breakdown from the up-channel but now it could stabilize outside of this pattern.
In the short term, we cannot exclude a temporary rebound; USDCAD forecast sees the pair attempting repeated tests of the 61.8% retracement level before resuming its drop.
The bias remains bearish in the short term as long as it stays below the descending pitchfork’s upper median line (uml). On the downside, the weekly pivot point (1.2345) and the 50% retracement level are seen as potential targets.
Declining and then stabilizing under these levels could indicate a potential closing on the descending pitchfork’s median line (ml) and with the pair settling around the 38.2% level.
If you are interested in getting into forex trading, then you might want to check out our guide to Forex Robots.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
