The USDCAD has moved sharply lower after the much stronger-than-expected Canada jobs report. The gain of 150K outpaced the prior month which was revised from an already strong 104K to 112K. And we thought the US jobs market was strong!
The USDCAD has moved lower on the report (higher CAD) and fell below the 200 hour MA at 1.33832 to a low of 1.33695. That low just took out the low price from yesterday at 1.33716. The price remains above the low from Wednesday however (and week). That level comes in at 1.33592.
On further selling, there is a swing area going back to early January between 1.3339 and 1.3358 (see all the green numbered circles). Getting below that area would increase the bearish bias.
Admittedly, the price traded above and below that area during most of last week’s trading with some volatile up and down price action as well.
This week’s low (so far) stalled near the top that swing area, and also against the 200 hour moving average (green line in the chart above). That 200 hour moving average also stalled the fall yesterday. Breaking below it today gives sellers more control. Traders will be watching the level as a key barometer for bullish and bearish today. Stay below is more bearish.
PS the 200 hour MA stalled the fall both on Wednesday and Thursday. So the break is somewhat significant.
The BOC was thrown a curveball with the report today. At their last policy meeting, the BOC announced that they would be entering a conditional pause for rates – conditional on data – as they see the hikes leading to slower growth and lower inflation.
Now with two successive months of huge job gains, you have to wonder how the thinking might have shifted. Comments from Macklem and others will be monitored closely.
The gains are mirroring the US after their huge 517K jobs increase in Non Farm payroll jobs, and the move of the unemployment rate to the lowest level since 1969. If job gains so strong, how can there be slower growth/recession? How can their be hopes for lower inflation as well.
I know employment is a lagging indicator, but the recent trend is toward strength and that is not good for the central bank(s) storyline(s)..
PSS The Bank of Mexico raised rates by a higher than expected 50 BPs. North America is humming.