The Canadian dollar has settled down after getting whipped by the greenback on Monday. Currently, USD/CAD is trading at 1.2766, down 0.14% on the day.
US dollar flexing muscle
The US dollar started the week with sharp gains, as USD/CAD climbed to a high of 1.2835, its highest level in 2021. The trigger for the newfound US dollar strength has been the rise in US treasury yields. In particular, the US 10-year bonds have caught the attention of investors, as it has climbed to 1.14 per cent. The dollar index has been moving higher and touched a high of 0.9071 on Monday. If the index can record a daily close above critical resistance at the 91.00 line, then the dollar short squeeze could continue.
US employment data ends 2020 on sour note
The nonfarm payrolls report for December, released Friday, was in the red, capping a dismal year for the labour market. The US economy saw a loss of 140 thousand jobs, its first decline since April. The numbers for the year 2020, which would have been considered unimaginable just a year ago, were gruesome – some nine million jobs were lost, making it one of the worst years for job creation in decades. Although there were significant gains in new jobs in the second half of 2020, the US economy is 11.5 million jobs below its pre-pandemic level. At the same time, there was some good news on the employment front, as wage growth jumped to 0.8%, crushing the estimate of 0.2%. This marked an 8-month high. With the Biden administration expected to pour billions into the economy in new stimulus, the labor market will be an important litmus test as to the strength of an economic recovery in the coming months.
- USD/CAD tested resistance at 1.2785 in the European session. Above, there is resistance at 1.2875
- The first line of support is at 1.2617, followed by support at 1.2539
- The 20-day MA line remains relevant
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/
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