Private sector employment for August 2020 took a massive hit with the addition of only 428K jobs. This was well short of market expectations of 1250K, even though this was higher than last month’s figure of 167K.
The latest employment data from Automatic Data Processing Inc (ADP), which measures non-farm employment in the private sector showed that most of the job additions in August came from large firms (298K job additions). The hospitality and leisure sectors led the pack, followed by companies in healthcare and education. Manufacturing companies were only able to add 9,000 jobs.
The report also showed that companies with fewer than 50 workers were only able to hire 52,000 workers, which indicates that small businesses in America are yet to fully recover their ability to hire workers, following the devastating impact of the coronavirus pandemic.
The US Dollar has had a mixed response to the news release. It is only up slightly against the Canadian Dollar, as the positive month-on-month change in the ADP employment was nullified by the shortfall in job additions relative to the market expectation. The USDCAD presently trades flat on the day at 1.30634.
Technical Outlook for USDCAD
With virtually no impact from the news on this pair, the technical expectations are playing out on the daily chart. The USDCAD found support at the 1.30385 level, reinforced by the channel’s trendline (lower border).
If the pair can get enough momentum on the bounce, the pair could target the 1.31501 resistance on its way to the opposing channel border. Above this level, the channel’s return line intersects the previous high of 29 January/prior low of 21 February at 1.32044, forming an additional target to the upside. Attainment of 1.33487 requires a breakout from the channel. With the US ISM Non-Manufacturing PMI and Non-farm Payrolls data still to come this week, this could be a possibility, consequent on extremely positive numbers coming in.
On the flip side, further weakness on the greenback from subsequent data, especially if the Canadian employment data is upbeat while the US NFP data comes in worse than expected, could allow the pair to breakdown the current support, This opens the door towards 1.29953, with 1.29241 also presenting itself as an additional downside target.