USD/CAD Exchange Rate Prediction – The Dollar Drops on Soft Payroll Report
USD/CAD continued to trend lower on broad dollar weakness. The dollar lost ground against most major currencies. The exchange rate broke through key support levels, on Thursday and did not retest those levels. The softer than expected U.S. NFP report weighed on the greenback helping the loonie gain more traction.
The USD/CAD dropped on Friday and continued to trade away from former support now resistance near the 50-day moving average at 1.2535. Additional resistance is seen near the 10-day moving average at 1.2659. Target support is the August lows at 1.2475. Short-term momentum has turned negative the fast stochastic generated a crossover sell signal. Medium-term upward momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).
Payroll Gains Decelerate
Following back-to-back months of nonfarm payroll gains of more than 900,000, employers added back the fewest jobs since January. Friday’s employment picture was disappointing, despite a drop in the unemployment rate. According to the Labor Department, nonfarm payrolls rose by 235K compared to expectations to increase by 733K. July was revised to 1.053 in July. According to the Bureau of Labor Statistics, the unemployment rate declined in August to 5.2% in line with expectations and lower than the 5.4% level in July.