USD/CAD Little Changed from Friday’s Jobs Reports

  • USDCAD
    (${instrument.percentChange}%)

USD/CAD

Canada added an impressive 153.7K jobs in November, beating estimates and prior print (31.2K), while Unemployment rate declined to 6.0%, compared to 6.7% in October.

The US data on the other hand, revealed an addition of only 210K payrolls, highlighting the fact that the recovery in the country's labor market is fragile. On the positive side though, Unemployment Rate dropped to 4.2% (from 4.6% prior) and the Participation Rate picked up to 61.8% (vs 61.6% prior) – albeit to below pre-pandemic levels.

The pair's initial reaction was lower after the two reports were released, due the stark difference between them, but quickly covered the losses and ended Friday in the green.

The unemployment and participation components helped mitigate the NFP disappointment and Friday's solid PMIs and Industrial Production were also supportive for the US Dollar. Furthermore, the jobs report does not seem to have any detrimental impact to the expectations for a faster tightening path from the Fed, in the aftermath of Mr Powell's hawkish comments last week.


Past Performance: Past Performance is not an indicator of future results.

Monetary policy will remain in the spotlight, as the Bank of Canada (Boc) hands down it policy decision on Wednesday December 8. The BoC concluded its Quantitative Easing program in the last meeting in October [1] and investors now wait to see when the bank will be ready to hike rates, which currently stand at 0.25%.

USD/CAD comes from seven straight weeks of profits, but the current one begins on the back foot, as the improved sentiment and the rise in Oil prices, help commodity currencies and the CAD in particular.

This creates risk for a pullback towards 1.2720-11 and a convincing break could open the door for a deeper correction, but such move and a test of the 200Days and 200H4 EMAs (currently at 1.2620-12590) does not seem easy at this stage.

Despite today's problems, the uptrend remains intact and the US Dollar has been riding high on hawkish Fed. Given this, it can push for fresh highs (1.2856), while the broader 1.2906-1.2950 region contains significant hurdles and a catalyst may be required for surpassing them.


Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 28 Jan 2022 https://www.bankofcanada.ca/2021/10/fad-press-release-2021-10-27/

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