USD/CAD – Canadian dollar climbs to 5.5-mth high

USD/CAD has posted considerable losses on Wednesday. The pair is currently trading at 1.3245, down 0.55%.

Mixed bag for US data

With no major events out of Canada, attention shifted to US indicators. ADP nonfarm payrolls posted a measly gain of 167 thousand, nowhere near the estimate of 1.20 million. This follows an impressive gain of 2.36 million in June. We’ll get a look at the official nonfarm payrolls on Friday, with a forecast of 1.55 million. If the actual reading follows the ADP release and falls well below this estimate, we could see some volatility from USD/CAD. There was better news from the US service sector, which improved to 58.1, above the estimate of 55.0. This points to strong expansion. In April the PMI hit a multi-year low of 41.8, as the services sector was hit hard by the lockdown in many US states to the corona pandemic.

The Canadian dollar continues to benefit from the woes gripping the greenback, which has showed a broad decline against the majors. The currency has gained 5.8% against the US dollar since April 1, and on Wednesday touched a low of 1.3237, its lowest level since February 24. Both Canada and the US will release key employment numbers on Friday, so traders should be prepared for some volatility around these releases.

USD/CAD Technical

USD/CAD is currently trading at 1.3238, down 0.61% on the day. The pair showed limited movement in the Asian session and then headed lower in European trade. The downward trend has continued in the North American session.

• 1.3440 is the next resistance line. Above, we find resistance at 1.3456
• USD/CAD tested 1.3235 in support late in the European session. 1.3185 is the next support level
• USD/CAD broke below the 10-day MA on Tuesday. This is a bearish signal, and the pair has dropped lower on Wednesday

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