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USD/CAD Price Outlook - Running Into Important Employment Data

USD/CAD Price Outlook - Running Into Important Employment Data

Nick Cawley, Strategist

USD/CAD Price, News and Analysis:

  • USD/CAD on hold ahead of important employment releases.
  • Oil rebound has helped boost the Loonie.
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The monthly look at employment figures in both the United States and Canada today will direct USD/CAD in the short-term but the longer-term trend looks likely to remain in place for now. Both countries are expected to see a slight rise in their respective unemployment rates, but as with all economic data, the devil is in the detail, making today’s release a focal point for USDCAD traders.

USD/CAD Price Outlook - Running Into Important Employment Data

For all market-moving economic data and events, see the DailyFX Calendar.

NFP and Forex: What is NFP and How to Trade It?

The daily chart shows that the pair has been in a well defined downtrend since mid-March, driven primarily by a weaker US dollar and given a boost of late by a stronger oil complex. Both central banks remain highly accommodative with a well-articulated approach to boosting their economies and pushing inflation back to target. The recent weakness of USD/CAD however will have hurt the Canadian export sector and made the central bank’s 2% inflation target harder to achieve, something that will have been noted by the BoC. A further sell-off in the pair may bring some verbal intervention from the central bank in an effort to stem further losses.

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The chart shows the pair treading water today ahead of the data releases. This week’s print at 1.2630 was a 32-month low and remains close to the current spot price at 1.2680. The pair trade below all three moving averages, with the 20- and 50-dmas in particular capping any upside breaks, while the CCI shows the pair in oversold territory. Any upside move is likely to find initial resistance between 1.2770 and 1.2800.

USD/CAD Daily Price Chart (April 2020 – January 8, 2021)

USD/CAD Price Outlook - Running Into Important Employment Data
USD/CAD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 10% 35% 18%
Weekly -3% 29% 7%
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IG Retail trader data show 66.03% of traders are net-long with the ratio of traders long to short at 1.94 to 1. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USD/CAD trading bias.

What is your view on USD/CAD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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