Today, we got jobs data from both the US and Canada. While US data improved and beat forecasts, Canadian data regressed and missed expectations. Let’s take a look a the data and the reaction in USD/CAD.
From the US, NFP employment change came in at 321K, better than the forecast of 231K, and October’s 243K, which was revised up from 214K. The November print is the strongest in 2014, the first above 300K since May 2010, and the 3rd strongest in 10 years. Furthermore, average hourly earnings grew 0.4% in November, besting forecast of 0.2%, and October’s 0.1% reading. This matches April’s print as the highest in 2014. Job increase and hourly earnings growth reinforces the reasoning and conditions for the FOMC to raise rates by mid-2015.
From Canada, we have the opposite situation. Employment change in November was -10.7K, missing forecast of 5.3K, and way down from the 43.1K reading in October. Jobs data continues to be volatile, but the trend is not so bad. Still, in the short-term, the divergence in US and Canadian jobs data for November should give USD/CAD at least a short-term boost in December.
Reaction: The USD/CAD was already edging higher prior to the data, and then got another jolt to the upside. It is now poised to test the November high in the 1.1460-1.1466 area. The technical picture for USD/CAD is bullish as it has broken above November’s falling channel, and confirmed the breakout this week by holding above 1.1325. This was also a bullish slingshot (moving average crossover followed by a bounce off the MA or MAs). Now after the jobs data, price has broken above this week’s triangle and confirmed the breakout as well.
Bullish Targets: If we assume the bullish continuation scenario, there’s a couple of bullish projections. first using the swing projection shown in the 4H chart, the next swing has a target of around 1.1540. A slightly more aggressive target would be to use November’s range as a projection above the resistance. The range is about 240 pips (not counting some tails to the downside). Above 1.1460, that gives us a projection to 1.17.
On the monthly chart, we can see that 1.7 is in a support/resistance pivot area and shoudl indeed be monitored for sellers if USD/CAD gets there.
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