- The USD/CAD outlook indicates a rebound in the Canadian dollar.
- Canada’s economy lost 65,500 jobs, compared to expectations of 4,900 new jobs.
- The greenback was also pressured by data showing only 22,000 new jobs in the US.
The USD/CAD outlook indicates a rebound in the Canadian dollar after a poor employment report led to a surge in Bank of Canada rate cut bets. The rebound comes as focus shifts to the Fed, which is also under intense pressure to lower borrowing costs.
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Data on Friday revealed that Canada’s economy lost 65,500 jobs, compared to expectations of 4,900 new jobs. At the same time, the unemployment rate jumped from 6.9% to 7.1%. This was a bigger number than the estimated 7.0%. Before the figures, market participants were pricing a 75% chance of the BoC cutting rates in September. This likelihood jumped to 90% after the data. As a result, the Canadian dollar collapsed against most of its peers, including the dollar.
However, the greenback was also pressured by data showing only 22,000 new jobs in the US. It was below the estimate of 75,000 and solidified bets for a September Fed rate cut. Traders are now preparing for the US CPI report for more clues on the outlook for Fed policy.
USD/CAD key events today
Traders are not looking forward to any key releases today. As a result, USD/CAD might extend Friday’s moves.
USD/CAD technical outlook: 0.618 Fib retracement triggers pullback
On the technical side, the USD/CAD price is pulling back to retest the 30-SMA as support. However, the bias is still bullish because the price trades above the SMA and the RSI is above 50. The retreat comes after the price met a solid resistance comprising the 0.618 Fib retracement and the 1.3850 key level.
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Bulls took charge when the price broke above the 30-SMA. Since then, they have been struggling to maintain a pattern of higher highs and lows. However, the pattern has paused at the 0.618 Fib level. At the same time, the price has punctured the 30-SMA before, a sign that bears are ready to challenge the uptrend.
A break below the SMA would signal a shift in sentiment, allowing USD/CAD to retest the 1.3725 support level. On the other hand, if the SMA holds firm, bulls will return to seek a new high above the 1.3850. Such a move would clear the path for the price to reach the 1.3920 resistance level.
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