USDCAD Falls as Canadian Unemployment Rate is Lower than Expected
The Canadian employment data just released shows that the Canadian unemployment rate has dropped to 5.6% (consensus: 5.8%), with a Canadian Employment Change of +35.2K jobs versus the consensus number of +24.9K. This was also better than the 5.9% and the -71.2K jobd registered as the previous figures for both sets of data.
Meanwhile the USDCAD has fallen by 30 pips, as the US unemployment data ended up being downbeat. The NFP data showed an employment change of +145K as opposed to the expected figure of +162K. This was also less than the previous figure of +266K. US unemployment rate remained at 3.5%.
Therefore, the two news releases from both sides of the North American border are in divergence with each other, allowing for a trade opportunity on the USDCAD. I analyzed this in my preview of the Canadian unemployment data release yesterday.
Prior to the release of the Canadian Unemployment rate figures, the USDCAD was in testing the upper border of the descending channel that can be seen on the daily chart. However, the pair has met resistance at the 1.30632 price level (previous low of 1 Feb and 28 June 2019).
With price now pulling back towards the upper channel border, the immediate downside target can be seen at 1.29953, with further support at 1.28951 (previous cluster of highs between October and December 2017 as well as a previous weekly low of 21 August 2018). This scenario could play out if price succeeds in entering the channel, which invalidates any upside moves at the moment.
On the flip side, a rejection of the pullback at the upper channel border could provide an opportunity for buyers to initiate re-entries, with 1.30632 and 1.31501 as initial resistance targets.