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USD/CAD Exchange Rate Prediction – The Dollar Drops following Weak Employment Report

By:
David Becker
Updated: Oct 8, 2021, 19:03 UTC

U.S. yields continue to rise

USD/CAD Exchange Rate Prediction – The Dollar Drops following Weak Employment Report

The dollar dropped against the Loonie slicing through trend line support, despite rising yields. The downward momentum in the greenback came following a softer than expected jobs report. There were mixed signals from the report. The unemployment rate declined despite only 194K jobs getting created. The underlying issue was that the jobs survey was taken in early September when the spread of the Delta variant was at its highest.

Technical Analysis

The dollar dropped against Loonie, slicing through support which was at an upward sloping trend line that comes in near 1.2550. support is seen near the July lows at 1.2310. The 10-day moving average is poised to cross below the 50-day moving average which means that a short-term down trend is in place. Short-term momentum has turned negative the fast stochastic generated a crossover sell signal. Prices are oversold as the fast stochastic is printing a reading of 3 below the oversold trigger level of 20 which could foreshadow a correction, Medium-term momentum has turned negative the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a lower trajectory which points to a lower exchange rate.

U.S. Unemployment Rate Declines.

According to the U.S. Labor Department, Nonfarm payrolls rose by 194,000 in September compared to expectations of 500,000.  The headline number was hurt by a 123,000 decline in government payrolls, while private payrolls increased by 317,000. The drop in the jobless rate came as the labor force participation rate edged lower, meaning more people who were sidelined during the coronavirus pandemic have returned to the workforce.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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