USD/CAD Declines as Traders Bet on Lesser of Two Jobs Data Evils

Summary:

The jobs data in Canada and the US were disappointing, but traders decide to pitch their tents with the loonie, sending the USD/CAD lower.

The USD/CAD’s response to the employment data on both sides of the northernmost North American border was a case of the lesser of two evils, with the loonie having the slight advantage over the greenback.

Statistics Canada reported a net loss of jobs in Canada (-68,000), far more than the markets expected (-20,000). The unemployment rate rose to 8.2%, matching market expectations. The US saw 559K jobs added (less than the projection of 645K), with a lower unemployment rate of 5.8%.

However, the driver of the pair on the day remains the inherent weakness in the greenback and rising crude oil prices that favour the loonie.

The USD/CAD is moderately lower in the New York session, down by 0.16% as of writing, enabling the pair to lose its hold above 1.21000.

Technical Outlook for USD/CAD

The daily chart shows that the pair was rejected at 1.21341, thus truncating the breakout move from the descending channel. The drop has found support at the 18 September 2017 low of 1.20830. A breakdown of this area allows the pair to aim for 1.20548, with 1.2000 psychological support also in view at the channel’s lower boundary.

A bounce on 1.20830 is required to prime the pair for a breakout from the channel. This move has to overcome the 1.21341 barrier for the 11 September 2017 high at 1.21708 to become visible. Above this level, the 22 January 2018/5 May 2021 low at 1.22467 becomes an additional target.