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USD/CAD: Dueling Jobs Report Disappointments, Bears May Target 1.21 Next

By Matthew WellerForexMay 09, 2021 12:22AM ET
www.investing.com/analysis/usdcad-dueling-jobs-report-disappointments-bears-may-target-121-next-200578660
USD/CAD: Dueling Jobs Report Disappointments, Bears May Target 1.21 Next
By Matthew Weller   |  May 09, 2021 12:22AM ET
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Two jobs report duds

It was a proverbial “shootout at the 49th parallel” with both the US and Canada releasing their highly-anticipated monthly jobs reports on Friday, but this time, both countries’ labor markets misfired.

As my colleague Joe Perry noted earlier Friday, the US Nonfarm Payrolls report showed disappointing jobs growth of only 266k jobs (vs. effectively 1M expected), and that was even before the -78k net revisions to past two months’ jobs reports. Nonetheless, the Canadian labor market also saw a setback, with Canada reporting a -207k decline in employment, taking the unemployment rate up to 8.1% in the Great White North.

Based on recent business surveys, the issue is more about labor market supply than demand; in other words, companies want to hire qualified employees, but many of those employees don’t yet feel comfortable (re-)entering the workforce due to a combination of safety concerns, childcare headaches, and generous government benefits. For a North American economy that was showing signs of turning the corner and reopening amidst widespread vaccine availability, it looks like we may have longer to wait before the labor market starts firing on all cylinders again.

USD/CAD Technical Analysis

Looking at the USD/CAD, traders are still weighing which of the two abysmal jobs reports was worse. While Friday’s fundamental reports out of the US and Canada have largely offset one another, the technical picture is far clearer. USD/CAD broke down to a 3+ year low below 1.2250 on Thursday, extending a downtrend that’s been in place for more than a year:

USD/CAD Daily Chart
USD/CAD Daily Chart

While we could see an oversold bounce early next week given the oversold RSI indicator, the technical bias remains to the downside as long as USD/CAD holds below previous-support-turned-resistance at 1.2250. To the downside, the next support level to watch will be the 6-year low around 1.2100.

Original Post

USD/CAD: Dueling Jobs Report Disappointments, Bears May Target 1.21 Next
 

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USD/CAD: Dueling Jobs Report Disappointments, Bears May Target 1.21 Next

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Comments (1)
Solomon Lalani
Solomon May 09, 2021 11:37AM ET
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1.225 would be a good level to short again, for target 1.2061. Buying accumulation for the mid-term should happen between 1.2061/1.1919 range with a target of 1.29 in about 4-6 months' time.  A retest of 1.2966 and a decline from there should break the 1.19 neckline for a long-term decline.
 
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