USD/CAD: Dueling jobs report disappointments, bears may target 1.21 next
May 7, 2021 1:15 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: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.