USD/CAD climbs to 1.3400 on broad USD strength

USD/CAD is rising for second straight day on Friday.
US Dollar Index posts decisive gains after US NFP report.
Upbeat data releases from Canada help CAD limit its losses.

Eren Sengezer FXStreet

The USD/CAD pair dropped toward 1.3320 in the early American session on Friday but reversed its course and climbed to 1.3400 area. As of writing, the pair was up 0.6% on a daily basis at 1.3384.

Earlier in the day, the initial reaction to the US and Canada labour market data caused USD/CAD to edge lower. Statistics Canada announced an increase of 418,500 in the Net Change in Employment and revealed that the Unemployment Rate dropped from 12.3% in June to 10.9% in July.

On the other hand, the US Bureau of Labor Statistics reported that Nonfarm Payrolls increased by 1,763,000 in July, compared to analysts' estimate of 1,600,000.

Nevertheless, with the heightened US-China geopolitical tensions and lack of progress in US coronavirus aid talks keeping markets risk-averse, the greenback gathered strength and caused USD/CAD to turn north. At the moment, the US Dollar Index is up 0.7% on the day at 93.41.

Meanwhile, Ivey Purchasing Managers Index in Canada rose sharply to 68.5 in July and beat the market expectation of 57.5, helping the CAD limit its losses for the time being.

USD/CAD near-term outlook

Commenting on the potential impact of Friday's data releases, "a better jobs print in both the US and Canada has the CAD back to trading on its front foot," said TD Securities analysts. "We think markets were closing USD shorts ahead of today out of caution that the US data had some downside potential. With that risk not materializing, we think the USD bid now looks tenuous and leaves USD/CAD inclined to trade back below the 1.3350/60 pivot. We expect supports located around 1.3230 to be formidable in the meantime.”

Additional technical levels to watch for

USD/CAD

Overview
Today last price	1.3384
Today Daily Change	0.0084
Today Daily Change %	0.63
Today daily open	1.33

Trends
Daily SMA20	1.3445
Daily SMA50	1.3515
Daily SMA100	1.3782
Daily SMA200	1.3528

Levels
Previous Daily High	1.3323
Previous Daily Low	1.3244
Previous Weekly High	1.346
Previous Weekly Low	1.3331
Previous Monthly High	1.3646
Previous Monthly Low	1.3331
Daily Fibonacci 38.2%	1.3293
Daily Fibonacci 61.8%	1.3274
Daily Pivot Point S1	1.3255
Daily Pivot Point S2	1.321
Daily Pivot Point S3	1.3176
Daily Pivot Point R1	1.3334
Daily Pivot Point R2	1.3368
Daily Pivot Point R3	1.3413

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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