USD / CAD Extends Fall After Jobs Data

USD / CAD crosses below 1.2700 after the release of employment data for Canada and the United States

USD / CAD extends its forex drop to two consecutive days and briefly broke through the 50-day moving average (DMA) around 1.2687, only to recover the 1.2700 figure after data on the jobs in Canada and the United States have been published. At the time of writing, the USD / CAD pair is trading at 1.2686.

  • The Canadian economy added double the jobs predicted by economists, while the unemployment rate fell below 6%.
  • The NFP report in the United States disappointed, but the unemployment rate fell below 4%.
  • USD / CAD Technical Outlook: A break below 1.2700 opens the door for a dip towards 1.2642.

Canada jobs report eclipsed US NFP report

The Canadian Economy File featured the December 2021 jobs report. Statistics Canada said the country added 54,700 jobs to the economy, doubling analysts’ estimates for a gain of 27,500. In addition, the unemployment rate fell from 6.0% to 5.9%.

The drop in the unemployment rate is the lowest observed since February 2020, before the emergence of Covid-19. After the December report, Canada’s labor market grew by 240,500 jobs above the pre-pandemic level. However, it should be noted that the poll was conducted between December 5 and 11, before the Omicron outbreak in the country. Analysts expect a weaker January 2022 report on the latter mentioned.

At the same time, the US Bureau of Labor Statistics (BLS) reported that non-farm payrolls increased by 199,000, worse than the 400,000 predicted by economists. The bright side of the jobs report is that the unemployment rate in the United States has fallen below the 4% threshold to 3.9%, below the estimated 4.1%.

In the meantime, US Treasury yields fell a bit, after hitting a daily high of around 1.771%, fell four basis points to 1.741%. The US dollar index (DXY), briefly broken through below 96.00 at the time of publication, stands at 96.03.

Technical perspectives

The pair chart USD / CAD hourly rate shows that the pair is biased downward after breaking through the 50, 100 and 200 hour Simple Moving Averages (SMAs), leaving them above the spot price. Additionally, the crossing of the 1.2700 level opened the door for a further decline to the S1 daily pivot level at 1.2684. A break of this level would expose the January 4th daily low at 1.2667, followed by the S2 daily pivot at 1.2642.

USD / CAD chart 30 minutes

Par Christian Borjon Valencia, FXStreet

Christian Borjon, Forex News Editor at FX Street, has been an experienced trader for six years in Forex and CFD commodities. He worked at CITI Banamex (CITI branch in Mexico) as a Forex Market Maker for a year and a half. Christian holds a UA Business Administration degree from C, Mexico. Like many other traders, he started taking a course and learning the hard way. Christian later discovered it and became obsessed with fundamental analysis and macroeconomics, as well as its influence on financial markets.

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The opinions expressed here are those of the author alone and do not necessarily reflect the views of Forex Quebec. Every investment and trading move comes with risk, you should do your own research when making a decision.

Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or a solicitation to buy or sell currency contracts or CFDs. Although the information contained in this document has been taken from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect or consequential damages that may result from the fact that someone relies on such information.

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