Data from Statistics Canada released this afternoon shows that Canadian Employment Change for June 2020 came in at 952.9K, which exceeded expectations of 700.0K and also trumped the previous figure of 289.6K by a mile.
The unemployment rate dropped marginally from 13.7% to 12.3%, even though this reduction did not meet market expectations. This result comes on the back of dismal US producer inflation data, which showed that monthly PPI and the core component of the report dropped to -0.2% and -0.3% respectively, far worse than the 0.4% and the -0.1% registered last month.
The contrasting fortunes of the data sets on both sides of the English-speaking countries of North America allowed for a short-term pullback on the daily candle of the USDCAD, with the pair dropping by 25 pips to trade at 1.3585. The pair is now off intraday highs by nearly 50 pips.
Today’s 1.5% drop in crude oil prices has served to undermine the response of the Canadian Dollar to what ordinarily is a great jobs report. This is despite the poor US data and the increasingly worrisome coronavirus situation in the US.
Outlook for USDCAD
Technically speaking, the USDCAD is trading in a range which is bordered by the 1.36961 price level (ceiling) and the 1.34656 support (floor). With no significant market news in sight for both currencies until Wednesday’s Bank of Canada interest rate decision, the primary fundamental influence could come from crude oil prices and the risk sentiment as per the coronavirus situation in the US.
A breakdown of the range’s floor opens the pathway towards the next support at 1.33821, with 1.33487 and 1.32974 being the closest support areas after that.
On the flip side, a break of 1.36961 opens the pathway for a recovery in the pair towards 1.37629. Other resistance targets which could become relevant if the pair advances beyond this level are 1.38513 and 1.40023.
If there is no significant fundamental impact, the pair may range trade until when the market sentiment changes.
USDCAD Daily Chart