The USD/CAD started this week bearish after a brief bullish correction last week. Last week, the FOMC said it wanted to see further improvement in the labor market before raising rates. Today, we got some disappointing US jobs data and a better-than-expected Canadian business data. This pushed along the USD/CAD to a new low on the year. Let’s take a look at the data points and the technical development in this pair.
US ADP Non-Farm Employment Change (Apr.): 169K
Previous: 175K (revised from 189K)
If you remember last month, when the ADP data came in better-than-expected, the USD did get a boost. Today, we saw that data point revised down while the April print fell short of expectations. We still have the official US NFP payroll report on Friday which will be more important than today’s release, but the expectations going into Friday will be negative.
CAN Ivey PMI (Apr.): 58.2
(click to enlarge; source: forexfactory.com)
Canada’s economic data points have been showing a recovery in Q2 after a slow Q1. The Ivey PMI measures health of general businesses and after a dip in Q1, we are seeing a rebound into expansion in April.
The disappointing US data and the better-than expected Canadian data pushed the USD/CAD into a new low on the year, but barely. Even though the pair dipped to 1.1940, below the previous low at 1.1948, we are still seeing buyers here.
With the prevailing trend bearish since April, we should expect the market to fade the current rebound. Look for resistance from May’s falling trendline around 1.2050 as the 1H RSI approaches 60. It will take a break above 1.21 to signal a bullish reversal. Otherwise, there is still downside risk towards a previous support pivot around the psychological level of 1.18.
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