USDCAD plummeted from 1.3512 to 1.3440 when Statistics Canada announced that Canada gained 15,300 jobs in February, a far cry from the 2,500 that was forecast. USDCAD traders were caught “long and wrong.” Traders sold USDCAD and stop losses were triggered on the break of 1.3460.
The move was exacerbated by the reaction to the US employment report. Nonfarm payrolls blew past the forecast for a gain of 190,000 jobs in February and posted a gain of 235,000. As impressive as that number is, traders focused on Average Hourly Earnings. At 0.2%, they were below the forecast of 0.3% but identical to the January level.
US dollar bulls stampeded to the exits. EURUSD rallied to 1.0640 from 1.0595 while USDJPY dropped from 115.50 to 115.05.
Nevertheless, the data will not do anything to alter the course of the FOMC and if anything may strengthen their resolve for a faster pace of rate increases.
This morning’s FX action in New York was in sharp contrast to the overnight session. Although the US dollar was slightly weaker, the moves were very shallow. USDJPY managed to rally but that move was fueled by EURJPY demand.
The commodity currency bloc managed to squeeze higher supported by a minor bounced in oil prices. WTI jumped to $50.08 from $49.48 in concert with the post NFP US dollar weakness.
USDCAD Technical outlook:
The intraday USDCAD technicals flipped to bearish with the break below 1.3440 on Friday morning which opens the door to a re-test of support in the 1.3380-1.3420 zone. A break below 1.3360 would extend losses to 1.3250 while a move above 1.3520 is need to reopen the topside target of 1.3600. For today, USDCAD support is at 1.3420 and 1.3380. Resistance is at 1.3460 and 1.3480
Today’s Range 1.3410-80
Chart: USDCAD 4 hour