USD/CAD Price Analysis: Bulls rejected by the 100-day SMA following US NFPs
|- USD/CAD reversed its course during the American session and got rejected by the 100-day SMA, falling to near 1.3335.
- NFPs showed that job creation in July cooled down while wages increased.
- Canada reported soft labour market and economic activity figures.
On Friday, the USD/CAD cleared daily gains and fell into negative territory as investors dumped the USD following Nonfarm Payrolls, which revealed that job creation cooled down in July. Canada also reported weak labour market data, so the factor driving the pair downwards was mainly the broad USD weakness from lower US yields.
The latest Nonfarm Payrolls report for the US presented a mix of data, painting a complex picture of the labour market. In July, the headline indicated the creation of 187,000 jobs, which fell short of the anticipated 200,000 but still exceeded the revised figure of 185,000 from previous reports. On the positive side, the Average Hourly Earnings experienced a 0.4% increase in the same month, surpassing expectations. Additionally, the yearly figure for Average Hourly Earnings rose to 4.4%.
Overall, the American labour markets flashed mixed signals during the week, but appeared to remain unbalanced while the economic activity remained resilient. This means that the Federal Reserve (Fed) may consider hiking at least one more time in the remainder of the year. Investors have opted to ignore rising wages as US yields decreased. The 2-year yield decreased by more than 1% to 4.80%, while the 5-year rate lead the decline, falling by more than 2% to 4.19%. The 10-year rate also weakened and fell to 4.11%, a sharp decline.
On the Canadian side, labour market data came in soft. In July, the number of employed people contracted by 6,400 while markets expected 21,100 newly employed workers while the unemployment rate remained steady at 5.5% YoY. Other data showed that the Ivey PMI released by the Richard Ivey School of Business, which captures business conditions in Canada, came in at 48.6 vs the 52.7 expected.
USD/CAD Levels to watch
The daily chart shows signs of bullish exhaustion for USD/CAD. The technical outlook appears neutral to bearish, with the Relative Strength Index (RSI) displaying a negative slope but staying above its midline and the Moving Average Convergence Divergence (MACD) showing fading green bars. Moreover, the pair is above the 20-day Simple Moving Average (SMA) but below the 100 and 200-day SMAs, indicating that the bulls aren't done yet and that the outlook still favors buyers.
Resistance levels: 1.3400 (100-day SMA), 1.3454 (200-day SMA), 1.3500.
Support levels: 1.3280, 1.3250, 1.3240.
USD/CAD Daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.