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USD/CAD – Canadian Dollar Rally Continues After Friday’s Sharp Job Numbers

The Canadian dollar has posted gains on Monday, continuing the upward movement which marked the Friday session. In North American trade, USD/CAD is trading at the 1.3270 level. On the release front, today’s key event is US ISM Non-manufacturing PMI. The index is expected to improve to 55.3 points. There are no Canadian releases on the schedule.

Employment numbers were on center stage on Friday, as both Canada and the US released key employment indicators. In the US, the numbers were a mix.  readings were mixed. Nonfarm Payrolls improved to 178 thousand, edging above the forecast of 177 thousand. This marked a 4-month high. However, Average Hourly Earnings, which measures wage growth, surprised with a decline of 0.1%, short of the estimate of 0.2%. This was the first decline in wage growth since March. The unemployment rate dropped to just 4.6%, well below the forecast of 4.9%. The strong labor market has been a key factor in the strong US economy, which saw GDP grow at a clip of 3.2% in the third quarter. Canadian employment indicators were solid, as Employment Change gained 10.7 thousand, much better than the estimate of -16.5 thousand. As well, the unemployment rate dropped to 6.8%, below the forecast of 7.0%. The Canadian dollar responded with gains on Friday, as USD/CAD dropped to 1.3254, its lowest level since mid-October.

The Canadian dollar enjoyed an excellent week, posting gains of 2.0%. The currency posted strong gains on Thursday, responding positively to the unexpected news that OPEC had reached an agreement to cut crude production levels. One of the major sticking points had been Iran’s insistence to maintain output at pre-sanction levels. Saudi Arabia swallowed hard and accepted Iran’s demand, paving the path for the first production agreement by OPEC since 2008. Oil prices jumped on the news and the Canadian dollar, which is sensitive to movement in oil prices, posted gains as well. The rally continued on Friday, as Canadian employment numbers beat expectations.

USD/CAD Fundamentals

Monday (December 5)

*All release times are EST

*Key events are in bold

USD/CAD for Monday, December 5, 2016

USD/CAD December 5 at 8:25 EST

Open: 1.3326 High: 1.3349 Low: 1.3271 Close: 1.3273

USD/CAD Technical

S1 S2 S1 R1 R2 R3
1.3026 1.3120 1.3253 1.3371 1.3457 1.3551

Further levels in both directions:

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Monday session. Currently, short and long positions are almost evenly split , indicative of a lack of trader bias as to what direction USD/CAD will take next.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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