The USD/CAD declined after the relatively strong Canadian jobs data. The pair rose to 1.2495, which was more than 5% above the lowest level this month.
Canada jobs data
The Canadian economy rebound accelerated in June as the country increased its reopening efforts. As a result, Canada added jobs for the first time in two months in June. According to the statistics agency, the country added more than 237k jobs in June after shedding more than 68,000 in May. The number of part-time workers increased by more than 263k.
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As a result, the country’s unemployment rate declined from 8.2% in May to 7.8% in June. In the same period, the participation rate rose from 64.6% to 65%, which is a sign that the economy is doing relatively well. The improvement of the Canadian labour market happened as the country started ending the previous Covid restrictions. The government has also boosted its vaccination process.
These numbers came at a time when the Bank of Canada (BOC) has shifted its tone on the economy. In April, it became the first major central bank to start tightening. It did that by lowering the size of the monthly purchases from $5 billion to $4 billion. Analysts expect that it will start hiking rates in the next two years.
The USD/CAD is also reacting to the falling US dollar as US bonds retreat. The benchmark bond yield, which moves inversely to the price, rose by more than 4% to 1.35%. This rebound happened after the yield declined to a four-month low of 1.25% on Thursday.
The USD/CAD pair will later react to the latest Fed monetary policy report. In it, the bank will provide an update on the state of the economy and where it sees interest rates at.
USD/CAD technical analysis
The four-hour chart shows that the USD/CAD pair jumped to a multi-week high of 1.2590 this week. This was the highest it has been since April 26. Today, the pair declined below the important support at 1.2490, which was the highest level on June 21. It is also slightly above the 50-day Exponential and volume-weighted moving averages. The two lines of the MACD have also made a bearish crossover. Still, in my view, I suspect that the pair will likely resume the bullish trend as investors attempt to move above the highest point this week.
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