USD/CAD Exchange Rate Prediction – The Dollar Rallies on Solid Payroll Report

The USD/CAD surged higher following Wednesday Fed’s decision to keep rates unchanged. The decision on Thursday by the Bank of England to keep rates unchanged and leave their quantitative easing program in place helped further buoy the greenback.  The FOMC announced that it will begin to taper its bond purchase program beginning in November and will continue to do this in December. ADP announced that private jobs increased more than expected in October ahead of Friday’s government jobs report.

Technical Analysis

The dollar rallied sharply on Thursday. The exchange rallied, bouncing off suport near the 10-day moving average, 1.2382. Resistance is seen near the 50-day moving average at 1.2546. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is about to turn 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). The exchange rate is now overbought as the fast stochastic is printing a reading of 97, above the overbought trigger level of 80.

ADP Private Payrolls Rise

ADP reported that U.S. jobs increased by 571,000 in October, beating expectations of 395,000 and above September’s 523,000. It was the best month for jobs since June. Leisure and hospitality, a category that includes bars, restaurants, hotels and the like, saw a gain of 185,000. From a size standpoint, businesses with more than 500 employees by far led the way with 342,000 new hires. Businesses with fewer than 50 workers added 115,000 and medium-sized firms increased by 114,000.