- USD/CAD reversed course during the American session and was rejected by the 100-day SMA, falling to near 1.3335.
- The NFPs showed that job creation in July cooled, while wages rose.
- Canada reported weak numbers in the labor market and economic activity.
On Friday, the USD/CAD pair unraveled daily gains and fell into negative territory as investors dumped the dollar following the release of Non-Farm Payrolls, which revealed that job creation cooled in July. Canada also reported weak labor market data, so the factor that pushed the pair lower was mainly the general weakness of the USD due to lower US yields.
The latest US Nonfarm Payrolls report presented a mixed bag of data, painting a complex picture of the labor market. In July, 187,000 jobs were created, below the 200,000 forecast but above the revised figure of 185,000 from previous reports. On the bright side, average hourly earnings saw a 0.4% increase in the same month, beating expectations. In addition, the annual figure for median hourly earnings rose to 4.4%.
Overall, US labor markets gave mixed signals during the week, but appeared to remain unbalanced, while economic activity held firm. This means that the Federal Reserve (Fed) could consider raising rates at least once more in the remainder of the year. Investors have chosen to ignore the rise in wages as US yields fell. The 2-year yield fell more than 1% to 4.80%, while the 5-year rate led the decline, down more than 2% to 4.19%. The 10-year rate also weakened, falling to 4.11%, a sharp drop.
On the Canadian side, labor market data was weak. In July, the number of people employed contracted by 6,400, while markets expected 21,100 new workers, and the unemployment rate held steady at 5.5% year-on-year. Other data showed that the Ivey PMI released by the Richard Ivey School of Business, which reflects business conditions in Canada, came in at 48.6 versus 52.7 expected.
USD/CAD levels to watch
The daily chart shows signs of bullish exhaustion for the USD/CAD. The technical picture appears neutral to bearish, with the RSI sloping negative but holding above its midline and the MACD showing fading green bars. Furthermore, the pair is above the 20-day SMA but below the 100- and 200-day SMAs, indicating that the bulls are not over yet and the outlook continues to favor buyers. .
Resistance levels: 1.3400 (100-day SMA), 1.3454 (200-day SMA), 1.3500.
Support levels: 1.3280, 1.3250, 1.3240.
USD/CAD Daily Chart
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
