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USD/CAD Facing a Double Dose of Critical Jobs Data

USD/CAD Facing a Double Dose of Critical Jobs Data

Nick Cawley, Strategist

USD/CAD Price, Chart, and Analysis

  • USD/CAD stalls around 1.2500 as job reports near.
  • Weekly retail trade data shows net-longs cut and net-shorts boosted.
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Today’s US and Canadian jobs releases will provide an up-to-date insight into the strength of both countries’ economies and will determine the short-to-medium term outlook for USD/CAD. The Fed’s dual mandate -stable prices and maximum sustainable employment – is well known but the latest round of US central bank speak has shifted towards the latter with inflation already running above target but seen as transitory. Today’s NFP report now takes on increased importance. Primary market dealers have a range between 1.2 million and 675k - with a median of 900k - for today’s release, leaving a sizeable range for traders to try and factor in.

In Canada, the job market looks to be in rude health despite the current unemployment rate of 7.8%. Today’s forecast is for unemployment to fall further, to 7.4%, in July as the country continues to pare back job losses from the coronavirus shutdowns.

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In the last week, USD/CAD has pulled back some of the recent sell-off from mid-July, multi-month high at 1.2808. The recent uptick has now stalled ahead of today’s data releases with support seen around the 1.2420/25 area with initial resistance just above 1.2600. The three moving averages are mixed, the CCI indicator is neutral while volatility has fallen over the last three weeks. With two important releases out at the same time today (13:30 BST), USD/CAD traders may get a decent shot of volatility heading into the weekend.

USD/CAD Daily Price Chart (December – August 6, 2021)

Retail trader data show 63.60% of traders are net-long with the ratio of traders long to short at 1.75 to 1. The number of traders net-long is 3.54% lower than yesterday and 16.68% lower from last week, while the number of traders net-short is 0.42% higher than yesterday and 33.43% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.

USD/CAD Bullish
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% 8% 5%
Weekly -4% -1% -2%
What does it mean for price action?
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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.