USD/CAD Exchange Rate Prediction – The Dollar Rallies on Employment Gains

The USD/CAD edged higher following Thursday’s rally and remained above resistance despite a stronger than expected jobs report.  The Fed said they will be patient and keep a sharp eye on the job market on Thursday, but signaled to the market that they are unlikely to tighten rates. They also believe that inflation will remain elevated for an extended period but will be transitory. Yields tumbled from elevated levels which helped buoy riskier assets but weighed on the greenback.

Technical analysis

The dollar eased higher on Friday after rallying sharply on Thursday. The exchange rallied, if trading above support near the 10-day moving average, 1.2398. Resistance is seen near the 50-day moving average at 1.2543. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought with the fast stochastic printing a reading of 85, above the overbought trigger level. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index is generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Payrolls Rise More than Expected

Nonfarm payrolls increased by 531,000 for October, compared to expectations of 450,000. Private payrolls were even more robust, growing 604,000 as a loss of 73,000 government jobs pulled down the headline number. According to the Labor Department, The unemployment rate fell to 4.6% and had been expected to edge down to 4.7%. increased 0.4% for the month, in line with estimates, but rose 4.9% on a year-over-year basis. The average workweek edged lower by one-tenth of an hour to 34.7 hours.