USD/CAD back above 1.2600 as US dollar recovers
|- USD/CAD traded at three-day lows but recovered later in the session.
- Canada’s mixed employment figures strengthened the loonie.
- US PPI increased the most since November 2010.
The USD/CAD has recovered some of its early losses and is trading at 1.2648, down 0.11% on the day. During the New York session, the pair dipped to a fresh three-day low at 1.2582. However, it staged a rebound, reclaiming 1.2600 amid mixed market sentiment and WTI rising prices. Additionally, the greenback’s performance is improving, with the US dollar index advancing 0.4%, at 92.55.
On the Canadian economic docket, the Unemployment rate fell from 7.5% in July to 7.1% in August, while Canada’s Net Change in Employment rose by 90.2K versus 100K foreseen by economists. Despite the mixed numbers, investors sold the USD/CAD, as the unemployment rate is approaching pre-pandemic levels.
According to National Bank of Canada analysts, the report showed an awe-inspiring job creation despite the uncertainty caused by the COVID-19. “Hiring continued in August at a very impressive pace despite the uncertainty caused by the Delta variant. We are particularly pleased to see that job creation is skewed toward full-time jobs for a second consecutive month, which is positive for wages and economic growth,” NBC said.
In the US, the Producer Price Index came at 8.3% versus 8.2% expected. This was the most significant increase since November 2010. Excluding energy and food, the PPI rose by 6.7%, a tick above the forecast.
The data confirms the rising prices were fed by supply disruptions, shortage of consumer and producer goods, and growing demand related to the pandemic.
Loretta Mester, President of Cleveland’s Federal Reserve, commented that US inflation would remain high in 2021 but it may slow down next year.
USD/CAD Price Forecast: Technical outlook
USD/CAD is trading above the bottom line of an ascending channel in the daily chart. The trend is tilted to the upside. However, a daily close above 1.2663 is needed to maintain the positive bias. If that is achieved, the pair’s first target will be 1.2700. The following supply zones to be tested are the September 8 high at 1.2762 followed by the 1.2800 figure.
On the flip side, failure to close above 1.2663 could exert downward pressure on the pair, exposing the 50-day moving average at 1.2578.
TECHNICAL LEVELS TO WATCH
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