USD/CAD Exchange Rate Prediction – The Loonie Rose on Strong Employment Data

The dollar moved lower against the Loonie following a stronger than expected Canadian jobs report. U.S. Treasury yields moved higher following the U.S. unemployment report despite a softer than expected non-farm payroll report. U.S.  Nonfarm payrolls grew by 199,000, while the unemployment rate fell to 3.9%. Compared with expectations, payrolls would rise by 422,000, and the unemployment rate would drop to 4.1%.

Technical Analysis

The USD/CAD moved lower. The exchange rate pushed through support which is now resistance seen near the 50-day moving average at 1.2683. Support is seen near the 200-day moving average at 1.25. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario 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 MACD histogram is printing in negative territory with a downward sloping trajectory which points to a lower exchange rate.

Canadian Employment Was Stronger than Expected

Statistics Canada said Friday that the Canadian economy added 55,000 jobs in December. In its labor force survey, the agency said that the number of people working increased as the unemployment rate edged down to 5.9%, following a 6.0% in November. It was the lowest unemployment rate since February 2020, before the pandemic when it was 5.7%.