USDCAD Overnight Range 1.2838-1.2951

USDCAD bounced off resistance at 1.2950 following another weak domestic economic report. Canada shed 2,100 jobs in April, worse than the forecast 5,000 gain and well down from the March gain of 40,600. Should you care? Probably not.  The monthly Canadian data is notoriously sketchy and therefore a poor indicator of the health of the economy.

USDCAD also gained on the back of a weaker-than-expected US nonfarm payrolls report. At first blush, USDCAD gaining doesn’t make any sense.  However, many economists believe that the US economy cannot sustain job gains above 200,000 because of the very low level of unemployment, (5.0%) so a 160,000 gain is “good”. In addition, the average hourly wage component rose by .31%. As of this writing (6:13 PST), EURUSD is back where it was before the data while USDJPY is a tad lower.

Overnight, the Australian dollar stole the show in Asia. The RBA’s quarterly Monetary Policy Statement surprised traders with a doveish tilt by downgrading its inflation forecasts. AUDUSD has shed a big figure since the news, falling to 0.7360 from 0.7460.  Kiwi followed Aussie lower.

The European session saw EURUSD and GBPUSD drift higher although neither move had any conviction.

The Canadian dollar will remain on the defensive for the next week due to this week’s soft data, bullish USDCAD technicals and a lack of major US or Canadian data next week. Rising oil prices will limit USDCAD gains.

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.2825 supported by today’s break of 1.2900 and now looking for a break of resistance in the 1.2950-60 area to extend gains to 1.3000.  A move below 1.2825 keeps the short term downtrend intact and will target support at 1.2770 and then 1.2680.  For today, USDCAD support is at 1.2900 and 1.2860.  Resistance is at 1.2960 and 1.3000

Today’s Range 1.2880-1.2960

Chart: USDCAD 4 hour