USD/CAD Surges Higher on Strong U.S. Jobs Report

The dollar rallied sharply against the Loonie in the wake of the better than expected jobs data. The 10-year yield rose along with the 2-year yield. The markets are now pricing in 125-basis points of tightening in 2022. In March 2022, there is a 100% chance of a 25-basis point tightening and a 50% chance of a 50-basis point tightening. The revisions to the payroll data were the real story.

Technical Analysis

The USD/CAD surged higher against the Loonie. The exchange surged through resistance now support at the 50-day moving average at 1.2711. Resistance is seen near a downward sloping trend line that comes in near 1.2915. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The exchange rate has moved out of the overbought territory, reflecting accelerating negative momentum. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy 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 positive territory with an upward sloping trajectory which points to consolidation.

Payroll Revisions Surge

Jobs data released on Friday showed a much more significant than expected gain in U.S. Jobs. According to the Bureau of Labor Statistics, U.S. job gains surged by 467,000 compared to expectations of 150,000. There were also significant revisions. December, which initially was reported as a gain of 199,000, went up to 510,000. November surged to 647,000 from the previously reported 249,000. For the two months alone, the initial counts were revised by 709,000.