The USD/CAD has been consolidating throughout February. After a failed bullish attempt last week, it fell back but still held above the triangle support area 1.2360-1.24. The, it drifted back towards the 1.2550 area, which held as resistance this week. Today (3/4) after the Bank of Canada’s monetary policy statement, the USD/CAD retreated from this 1.2550 resistance, and looks poised to test the 1.2360-1.24 support again.
Today, the Bank of Canada decided to hold its benchmark interest rate at 0.75% after cutting it from 1.00% in January. The BoC statement cited low headline inflation, but acknowledged that core inflation was in-line with the target of 2%. It also noted that the recovery in the US is a source for global economic recovery. There was nothing special out of today’s decision. The move in the USD/CAD is more technical then anything, and simply shows that the market remains tentative ahead of Friday’s US jobs report.
The 4H chart shows the USD/CAD back pedaling from 1.2550. Now, if price falls to 1.2360-1.24 area, we should expect support, especially with the US Non-Farm Payroll report due Friday. If there is a break, we should expect some consolidation. Now if price does remain below 1.2360 after Friday’s US NFP report, we can look for further bearish correction in USD/CAD with the 1.21 then the 1.20 handle in sight.
However, if price climbs back above 1.2550 after the NFP report, the USD/CAD will likely be in bullish continuation, with the 1.28 handle in sight.
US NFP Employment Change (Feb.)
(click to enlarge; source: forexfactory.com)
A reading that is near or better than 250K should validate the Fed’s optimistic outlook on the jobs market. However, if the reading is close to 200K, the USD might slide unless the January reading is revised to about 300K. We did see a significant upwards revision from today’s ADP employment change number, where we saw the January print changed to 250K after an the original reading of 213K.
Previous Post by Author: GBP/JPY Forms a Price Top