In July, the Canadian economy added about 200 jobs, essentially flat. Although this is better than the -9.4K print for June, it missed forecasts of a rebound to 25.4K. When you look at the historic chart of employment level, it looks like it is flattening in the recent months.
(source: Statistics Canada)
The unemployment rate fell to 7.0% from 7.1%. This dip in unemployment can be attributed to a decline in the number of people seeking work. According to Statcan, the unemployment rate, if using the concepts the US uses, is about 6.0%, compared to US’s 6.2%.
USD/CAD stalled a rally this week after it hit 1.0986. After falling and then trading sideways for a couple of sessions, the pair was trading within a moving average cluster. After the soft Canadian jobs data, traders faded the CAD, and the USD/CAD rallied, keeping the 200-hour SMA as support and rallying above the 100- and 50-hour SMAs. The RSI is pushing above 60, which indicates a loss of the near-term bearish momentum established during the 8/6 session.
The 1H chart shows a market that is maintaining a bullish trend after a brief consolidation during the past couple of sessions. Today’s reaction is essentially a bullish continuation signal.
When you look at the daily chart, you see that the next key resistance will be around 1.1050, the highs in April.
(USD/CAD Daily Chart, click to enlarge)
Failure: Now, the bullish continuation today is off poor Canadian data. This has been the theme for the loonie as the economy seems to be taking a step back in Q2 and now at the start of Q3. Meanwhile, US data has been strong. Thus, it won’t be a surprise that the USD/CAD extends the rally toward 1.1050.
However, failure of poor data to push USD/CAD above this week’s high of 1.0986 would reflect exhaustion, and put pressure back towards this week’s lows around 1.0905 down to some support pivots from last week aroudn 1.0880, seen in the 1H Chart.
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