USD/CAD soars to multi-week highs amid hawkish bets on the Fed

The USD/CAD gained momentum in Thursday’s session and jumped to its highest since mid-June to 1.3370. On the other hand, the DXY index still trades in the red but cleared some daily losses, trading at the 103.10 area. 

According to the Employment Change report from Automatic Data Processing, Inc., the US economy added 497K new jobs in June, surpassing expectations of 228K and showing an increase from the previous month's figure of 278K and fueling hawkish bets in the Federal Reserve (Fed).

It's worth mentioning that at the European Central Bank (ECB) forum in late June, Chair Powell from the Fed warned that a tight labour market could justify additional hikes, so ADP figures support a more aggressive stance from the Fed. That being said, Nonfarm Payrolls (NFPs) figures, expected to increase by 225K (previous 339K), will be the highlight of Friday’s session, providing additional information to markets regarding the US labour market.

Canada will also release labour market data. The Net Employment change is expected to come in at 20k from its previous figure of -17.3K, while Average Hourly Earnings to expand by 0.3% MoM and the Unemployment rate to rise to 5.3% from its prior 5.2%.

USD/CAD Levels to watch

The daily chart suggests that the USD/CAD’s outlook has turned neutral to bullish for the short term. In that sense, technical indicators are gaining ground, with the Relative Strength Index pointing north and jumping to positive territory and the Moving Average Convergence Divergence (MACD) printing green bars. However, the pair still has some work to do as it trades below the 100- and 200-day Simple Moving Averages (SMAs).

Resistance Levels to watch: 1.3380, 1.3390, 1.3340.
Support Levels to watch: 1.3280, 1.3250 (20-day SMA), 1.3220.

USD/CAD Daily chart