Is the US Labor Market really holding well? – North American Mid-Week Market update

• Mid-Week review where we dive into the major developments for North American and global traders
• Traders are moving beyond early 2026's Trump volatility back towards economic data, and it isn't less confusing
• US assets and the Dollar are resilient despite pessimistic sentiment

Log in to our mid-week North American Markets overview, where we examine current themes in North America and provide an overview of index and currency performance.

Volatility has (relatively) come down from what Traders have been used to since the start of the year.

Without many new regime-changing geopolitical catalysts, Markets are slowly getting back to their usual rhythm. Except for some renewed policies to reduce reliance on the US Dollar and Treasuries, not much has changed, and the Greenback is now way off of its 95.55 lows.

The Greenland Crisis did not develop into a catastrophe, and developments in Iran remain muted (at least for now – Keep a close eye on any news coming from the US-Iran talks).

Hence, participants are now turning back to economic data amid the ever-moving economic and financial puzzle of the US economy.

And the puzzle isn't an easy one to solve.

Last week sent out a few warnings about a weakening Labor picture for the US through a three-piece combo: weaker ADP Private payrolls, Jobless Claims erasing their progress made through December, and another scary Challenger layoffs report, indicating the highest pace of firing for January since 2009.

But this morning actually reversed the trend, with Non Farm Payrolls surprising massively to the upside (+130K vs 70K exp), sending out conflicting signals to traders. In any case, they will only be able to place decisive orders after Friday's CPI release (8:30 A.M.).

Discarding the gigantic downward -858K revisions in NFP since March 2025, the US curve actually took out some of the premium pricing for Fed Cuts throughout the year, particularly during the mid-2026 meetings. The picture will be clearer at the end of the week.

On the Northern Border, the Bank of Canada just released its minutes, adding further clarity on the current policy stance, seen as more "stimulative side" at 2.25%, providing a floor for current rates.

The committee seems to appreciate that the Core inflation measure has eased further to 2.5% despite supply chain restructuring post-tariffs. Expect to learn more about the issue next Tuesday, when the Canadian CPI is released.

Nevertheless, the BoC expects slow growth (1.1% GDP expected in end 2026), so traders haven't yet assessed any hawkish turn in the Central Bank's policy – something to monitor as more 2026 data is released.

The US-Canada-Mexico agreement (USMCA) remains a potential source of volatility among the North American economies. Get access to the detailed minutes right here.

Let's dive right into our Mid-Week North American Markets recap.

Read More:

• Hawkish NFP sends Stocks lower – Dow Jones and US Index Outlook
• USD/JPY Outlook: Momentum bearish, but can the US dollar find support on strong jobs data?
• NFP surprises to the upside – Market Reactions

Except for the Dow Jones reaching the 50,000 milestone last Friday, attention has diverted away from US Equities which are maintaining a broadly rangebound trajectory.

Canada on the other hand is demarcating itself from its North American peers, up 2.15% since last Wednesday.

The real impressive performance however comes from the Land of the Rising Sun, with the Tokyo Index up above 6% (!!!) after Takaichi's landslide victory in Sunday's snap elections.

The US Dollar has woken up from its tumble at the beginning of the week, particularly after this morning's beat in the NFP data and the consequent pricing out of cuts.

At the lows of its higher timeframe 8-month long consolidation, technicals point to higher chances of a rebound from here but will be highly contingent on Friday's CPI report. Even an as-expected number would precede a rebound in the Greenback.

Only a decisive miss would push for further downside in that aspect.

Levels of interest for the Dollar Index:

Resistance Levels

• 97.30 4H MA 50
• August Range Bull/Bear High Timeframe Pivot 97.40 to 97.60
• 98.00 Key Resistance (+/- 100 pips)
• Pre-Greenland Resistance 99.25 to 99.50

Support Levels

• 2025 Lows Major support 96.50 to 97.00
• Daily lows 96.49
• 95.50 to 95.70 Flash-crash Support
• 95.55 Trump-Crash Lows
• 94.70 to 95.00 Psychological level
• 93.00 Next Main Support

The USD lost some of its post-Warsh nomination gains, particularly against the Japanese Yen which is now ongoing some spectacular reversal, pushed higher by profit-taking and FX Intervention fears.

The Dollar is now up only against the GBP, but looking to regain some advantage after NFP.

Loonie performance is still quite muted, situated right in the middle of the FX board since early 2026 in the waiting for further clues on the Canadian economy and/or the BoC.

Still, with Oil rebounding and now stabilizing above $60, the CAD should see a progressive appetite barring any major soft release.

After very volatile movement in the past 1.5 years, the North American major pair is stabilizing.

Now holding a large range from 1.35 to 1.3730, USD/CAD isn't looking for further downside anymore.

Look for the range to hold for the time being, barring any major economic or geopolitical period – Caddie has a preference for sideways when volatility tones down.

Currently at the low of this range, upside looks favored. Still, watch out for US CPI which can change the picture quite drastically.

Levels of interest for USD/CAD:

Resistance Levels

• 1.3630 to 1.3660 Mid-Range Pivot
• 1.3750 Pivotal Resistance
• 1.38 Key Resistance
• Major Resistance 1.3870 to 1.39 (January highs)

Support Levels

• 2025 Key support Zone 1.3560 to 1.36 (Current bounce)
• October 2024 Support 1.3450 to 1.35
• 1.3480 USD-Crash lows

Keep close attention to Friday's US Inflation number!

Safe Trades!

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