USD/CAD bounces to 1.2270 as Canadian employment disappoints

The job data in Canada came below expectations giving the USD/CAD a boost.
Loonie is trading close three week’s low as oil prices are rising and the USD is on the back foot.

Flavio Tosti Independent Analyst

The USD/CAD is trading at around 1.2760 virtually unchanged on Friday.

Freshly released, the Canadian Unemployment Rate in April came in-line with analysts expectations at 5.8% while the Net Change in Employment in April disappointed at -1.1K versus 17.4K expected by analysts. The Participation Rate came slightly below estimates at 65.4% versus 65.5% forecast and the USD/CAD jumped 40 pips on the news.

In Asia, the Loonie traded flat in the 1.2760 region and when European traders came to their desks they pushed the pair down to the 1.2730 level. After the disappointing Canadian job data released in the American session, the USD/CAD had a 40-pip bounce to 1.2278.

As CAD is tightly correlated to rising oil prices, the currency is seeing strong demand. On the flip side, USD is consolidating after a three week’s bull run.

USD/CAD 4-hour chart

The Loonie is close to three week’s low and the medium-term trend is bearish. Immediate support is seen at 1.2740 swing low followed by the 1.2700 figure. To the upside, resistance is seen at the 1.2800 and 1.2850 psychological levels. The pair is trading below its 50, 100 and 200-period simple moving averages which suggests a strong downward momentum.

Author

Flavio Tosti

Independent Analyst

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