USD/CAD down 70-pips post-NFP fiasco; bears in control targeting 1.2820

Jose Ricaurte Jaen Analista independiente

Currently, USD/CAD is trading at 1.3001, down -0.18% on the day or (22)-pips, having posted a daily high at 1.3075 and low at 1.2992.

The Canadian dollar vs. American dollar found renewed buying interest as the exchanged rate approached the psychological 1.3000 mark. Furthermore, US dollar bulls were confused and almost disappointed due to the Unemployment Rate at 4.8% 'a worse than expected' figure amid a stellar 227K Nonfarm Payrolls.

Stephen Poloz, Governor at BoC, has indicated that 'rates cuts are on the table' and Canadian bond yields cannot emulate the rising yields in the US. Those factors seem to signal to traders and investors further long-dollar opportunities, however, Trump's 'devaluation rhetoric' has been enough to disrupt all data in favor of lower-highs and lower-lows that translate into Loonie strength; at least in the near term.

Historical data available for traders and investors indicates during the last 5-weeks that USD/CAD pair had the best trading day at +1.71% (Jan.18) or 227-pips, and the worst at -1.02% (Jan.17) or (133)-pips.

ISM Non-Manufacturing Signals Growth Remains Solid

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.3120 (200-DMA), then at 1.3210 (high Dec.9) and above that at 1.3280 (100-DMA). While supports are aligned at 1.2968 (low Jan.31), later at 1.2818 (low Sept.7) and below that at 1.2710 (low June 24, 2016). On the other hand, Stochastic Oscillator (5,3,3) seems to head south. Therefore, there is evidence to expect further Loonie gains in the near term.

On the long term view, if the 'double Doji' candlestick formation from 1.3587 (high Nov.) and 1.3597 (high Dec.) is in fact, a critical resistance-top, then any upside potential seems limited for this currency pair. Then, to the downside, supports are aligned at 1.2990 (short-term 23.60% Fib), later at 1.2626 (long-term 50.0% Fib) and finally below that at 1.2460 (low May. 2016). As of writing, USD/CAD trades around 1.3000, therefore upside barriers are aligned at 1.3190 (high August. 2016), then at 1.3318 (short-term 38.2% Fib) and finally above that at 1.3468 (long-term 61.8% Fib).

Payrolls only matter until Trump tweets

Author

Jose Ricaurte Jaen

Analista independiente

Born in Colón (Panamá). Over the last years, he has been designing currency algorithms for the retail industry.

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