USD/CAD rebounds, punches above 1.25

The Canadian dollar is trading quietly in the European session. Currently, USD/CAD is trading at 1.2505, up 0.51%.

Canada job data sends lifts loonie

The Canadian dollar ended the week on a high note, courtesy of excellent June employment data. The economy created 231 thousand jobs, smashing past the consensus of 175 thousand. This was a strong rebound from May, which disappointed with a reading of -68.0 thousand. What is particularly encouraging is that the economy has recovered most of the jobs which were lost due to Covid. As expected, the unemployment rate fell to 7.8%, down sharply from the previous reading of 8.2%.

The strong employment numbers are unlikely to change the stance of the Bank of Canada, which holds its policy meeting on Wednesday. An ING report said that the BoC will continue to taper its QE programme and will shut down bond purchases by the end of 2021, with rate hikes to follow in the second half of 2022. The report added that inflation is higher than the BoC target and the economy is on an “encouraging growth path”.

The BoC was the first major central bank to scale back bond purchases and is expected to taper for a third time on Wednesday, reducing weekly purchases from 3 billion dollars to 2 billion dollars. Tighter policy is bullish for the Canadian dollar, which could also receive a lift this week from strong oil prices.

The Canadian dollar has received a boost from higher oil prices, but the recent collapse of OPEC+ talks could lead to a fall in oil prices if producers decide to flood the market in order to grab more market share. The group usually finds a way to overcome internal disagreements, and the expectation that a compromise will be reached between Saudi Arabia and the UAE has supported oil prices.

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       USD/CAD Technical

  • USD/CAD faces resistance at 1.2594. Above, there is resistance at 1.2735
  • On the downside, there is support at 1.2306. Below, there is support at 1.2161

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

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

Market Analyst at OANDA
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.