The USD/CAD pair jumped on Tuesday, helped by the stronger greenback and the relatively weak Canadian trade data. It is trading at 1.2332, which was 0.52% above last week’s low of 1.2267.
Canadian dollar pressured
The USD/CAD rose on Tuesday as the US dollar rally intensified. The greenback rose against all currencies in the dollar index. It also rose against most developed and emerging market currencies like the Turkish lira and South African rand.
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The Canadian dollar is struggling after the relatively weak March trade numbers. According to the country’s statistics agency, exports rose from C$49.86 billion to more than C$50.6 billion. In the same period, imports rose from C$48.82 billion to more than $51.7 billion. As a result, the trade surplus deficit rose from the previous surplus of C$1.0 billion to more than C$1.14 billion. This performance was mostly because of strong demand from the United States.
Meanwhile, in the US, the country’s exports rose from $187.3 billion to more than $200 billion while imports rose from C$258 billion to more than C$274 billion. This pushed the trade deficit up by 5.6% to $74.4 billion.
The USD/CAD also rose ahead of the important jobs numbers from the two countries that will come out on Friday. Economists expect the data to show that the two countries added thousands of jobs in April. In the United States, they expect that the non-farm payrolls rose by more than 980,000 in April while the unemployment rate fell to 5.8%.
On the other hand, from Canada, they see the economy adding more than 100,000 jobs after adding more than 300,000 in March. The unemployment rate is expected to fall to 7.3%.
These numbers will come two weeks after the recent Bank of Canada (BOC) left interest rates unchanged and started to tighten.
The USD/CAD pair has bounced back after forming major support at 1.2266. The pair has formed a small inverted head and shoulders pattern. It has also crossed the 25-day and 50-day weighted moving averages (WMA). Further, it is approaching the 23.6% Fibonacci retracement level at 1.2358. Therefore, in the near term, the dollar strength will push the pair upwards. There is a possibility that it will jump by 1% to the 50% retracement at 1.2460.