USD/CAD: Dueling jobs report disappointments, bears may target 1.21 next
Matt Weller, CFA, CMT May 7, 2021 6:15 PM
Traders are still weighing which of the two abysmal jobs reports was worse, but the technical picture is far clearer...
Two jobs report duds
It was a proverbial “shootout at the 49th parallel” with both the US and Canada releasing their highly-anticipated monthly jobs reports this morning, but this time, both countries’ labor markets misfired.
As my colleague Joe Perry noted earlier today, the US Non-Farm Payrolls report showed disappointing jobs growth of only 266k jobs (vs. effectively 1M expected), and that was even before the -78k net revisions to past two months’ jobs reports. Nonetheless, the Canadian labor market also saw a setback, with Canada reporting a -207k decline in employment, taking the unemployment rate up to 8.1% in the Great White North.
Based on recent business surveys, the issue is more about labor market supply than demand; in other words, companies want to hire qualified employees, but many of those employees don’t yet feel comfortable (re-)entering the workforce due to a combination of safety concerns, childcare headaches, and generous government benefits. For a North American economy that was showing signs of turning the corner and reopening amidst widespread vaccine availability, it looks like we may have longer to wait before the labor market starts firing on all cylinders again.
USD/CAD Technical Analysis
Looking at the USD/CAD, traders are still weighing which of the two abysmal jobs reports was worse. While today’s fundamental reports out of the US and Canada have largely offset one another, the technical picture is far clearer. USD/CAD broke down to a 3+ year low below 1.2250 yesterday, extending a downtrend that’s been in place for more than a year:
Source: TradingView, StoneX
While we could see an oversold bounce early next week given the oversold RSI indicator, the technical bias remains to the downside as long as USD/CAD holds below previous-support-turned-resistance at 1.2250. To the downside, the next support level to watch will be the 6-year low around 1.2100.
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: StoneX Financial Ltd (trading as "Forex.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, Forex.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by Forex.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although Forex.com is not specifically prevented from dealing before providing this material, Forex.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
For further details see our full non-independent research disclaimer and quarterly summary.