Since rallying from the 1.0620 low in July, USD/CAD found resistance at 1.0986. Earlier this week, Statistics Canada announced that it made an error in last week’s employment report, which showed the there were only 200 jobs added in July. Today, the revisions came in.
Instead of 200, Canadian employment rose 41.7K in July. Economists had forecast a reading around 20K, so this revision went from missing forecast of about 20K, to beating forecast by 20K.
– Full time employment dropped by -18.1K, NOT -59.7K.
– Part-time employment rose by +59.9K, which is not much different from the erroneous report that said +60.0K.
– Private employment revised to +54.6K from +26.3K
– Public employment revised to +24.2K from +3.2K
– Self employment revised to -37K from -29K
The unemployment rate was not revised, at 7.0%, which was down from the previous month’s 7.1% print.
Statistics Canada explained that this was human error during the data processing stage.
USD/CAD Development: The USD/CAD was forming a double top after Statcan announced its revision. Because the erroneous report missed forecasts, it was reasonable to expect the revisions to be positive. The USD/CAD thus completed the double top, and was already drifting toward loonie-strength.
Looking at the 4H USD/CAD chart, you can see that after the revised data came out, which actually beat original forecasts, the CAD started to strengthen, and the USD/CAD started to slide sharply from the double top.
(click to enlarge)
Looking at the 4H chart, we can see that the double top was complete and now price is breaking below the rising trendline from mid-July. The next level to monitor for support is in the 1.0790-1.0800 area, which contain a previous support/resistance pivot and the 200-period SMA in the 4H chart.
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