- USD/CAD sees further declines below 1.3600 as US Dollar remains on the defensive.
- Fading strength in the US labor market and growing concerns about the economic outlook have weighed on the US dollar.
- The next major trigger for the Canadian Dollar and the US Dollar will be employment data from their respective regions.
The USD/CAD pair looks fragile near the monthly low around 1.3620 in the European session on Thursday. The CAD asset is weakening as the US Dollar (USD) faces significant selling pressure after the United States (US) ADP Employment Change data for June showed that strength in the labor market is waning and the ISM Services PMI, in the same period, indicated that the economic outlook has become uncertain.
The US Dollar Index (DXY), which tracks the value of the greenback against six major currencies, is down near 105.30.
The ADP Employment report showed that private sector labor demand unexpectedly declined. The number of people hired in the private sector was 150,000, lower than expectations of 160,000 and the previous release of 157,000. The ISM Services PMI, a measure of activities in the service sector that accounts for two-thirds of the economy, was at its lowest level in four years.
Looking ahead, the US Dollar and the Canadian Dollar (CAD) will dance to the tune of official employment data for June, due out on Friday.
The USD/CAD extends its losing streak for the third trading session on Thursday. The CAD asset falls in the bearish trajectory after a downside breakout of the Symmetrical Triangle formation on a daily time frame. The mentioned chart pattern indicates a sharp contraction in volatility and a downside breakout of the same results in wider bearish ticks and heavy selling volume.
The pair is trading below the 50-day exponential moving average near 1.3676, which suggests that the short-term trend is bearish.
The 14-day Relative Strength Index (RSI) has fallen near 40.00. A decisive break below 60.00 levels would push the momentum lower.
A decisive break below the May 3 low around 1.3600 will expose the asset to the April 9 low around 1.3547 and the psychological support at 1.3500.
On the other hand, a fresh buying opportunity would emerge if the asset breaks above the June 11 high near 1.3800. This would take the asset towards the April 17 high at 1.3838, followed by the November 1, 2023 high at 1.3900.
USD/CAD daily chart
Economic indicator
Net change in employment
Data published by Statistics Canada which measures changes in the number of people employed in Canada. An increase in this indicator has positive implications for consumer spending and ultimately stimulates economic growth. A result above the market consensus is bullish for the Canadian dollar, while a result below is bearish.
Next post:
Fri Jul 05, 2024 12:30 PM
Frequency:
Monthly
Dear:
22.5K
Previous:
26.7K
Fountain:
Statistics Canada
Canada’s labour market statistics tend to have a significant impact on the Canadian dollar, with the Employment Change figure carrying the majority of the weight. There is a significant correlation between the number of people in work and consumption, which impacts inflation and the Bank of Canada’s rate decisions, which in turn move the Canadian dollar. Actual figures that beat consensus tend to be bullish for the CAD, and currency markets typically react steadily and consistently in response to the release.
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.
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